Investing.com -- Compass Point upgraded Coinbase (NASDAQ:COIN) to Neutral in a note Monday, citing the “growing potential of a mini ‘Alt Season’ this summer” that could reignite retail trading activity and improve earnings prospects.
The firm explained that while April and May trends suggest Coinbase may generate just $1 billion of annualized EBITDA, analysts at Compass Point noted “green shoots for a resurgence in retail trading driven by higher Altcoin prices.”
They added that Coinbase’s fundamentals have “decoupled from BTC prices,” pointing out that while Bitcoin is up 10% year-to-date, Coinbase shares are down 20%.
“We believe COIN’s fundamentals are driven by Altcoin prices which influence retail trading and USDC supply,” Compass Point wrote.
“Retail trading and USDC/interest income are still COIN’s core profit drivers,” while other revenue lines such as institutional trading and blockchain rewards offer lower margins or limited contributions, said the firm.
Compass added that Altcoin prices remain 20–30% lower year-to-date, which has weighed on retail sentiment.
However, the firm believes crypto markets are in “early phases of a 2Q rebound,” and underleveraged traders offer “upside optionality if traders lever up in a risk-on environment.”
Still, structural challenges are said to remain. “Major CEXs typically list new Altcoins at peak prices,” the analysts said, highlighting $TRUMP and $DOGE as examples, both of which trade well below their listing levels.
Additionally, they warned of persistent “toxic dynamics” from venture capital–backed token unlocks, estimating $3–$4 billion of monthly supply hitting the market in coming months.
While Compass Point doesn’t expect a full replay of the 2020–21 Altcoin boom, they noted, “Alts typically rebound as BTC approaches new highs,” leaving room for a tactical rally that could temporarily lift Coinbase’s fortunes.