Sat, September 23

JP Morgan’s Forecast: Ethereum Merge a Ray of Hope for Coinbase

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JP Morgan’s Forecast: Ethereum Merge a Ray of Hope for Coinbase Ethereum News
  • JP Morgan estimates Coinbase to generate an annual staking revenue of $650M.
  • Coinbase will pause new ETH deposits and withdrawals during the Merge.

The Merge, Ethereum’s transition from PoW to PoS, is just around the corner. Thus, the whole DeFi space is gearing up for this upgrade that is scheduled for September 15. Series of hypotheses and predictions on the impact of this event is on loop now. Notably, the New York-based investment bank, JP Morgan, predicts a bullish future for the Coinbase exchange owing to the Ethereum Merge.

In a note to investors, Kenneth Worthington, a prominent analyst of JP Morgan, forecasts a “bigger revenue opportunity” for the crypto exchange from its Ether (ETH) holdings and the ETH staking service. Coinbase has a solid stance in ETH holdings by hosting 15% of the market shares in ether (ETH).    

Foreseeable Recovery

Accusation of insider trading, the listing of unregistered assets, the significant cut-down in its Q2 revenue, plummeting stocks, lay-offs, and a loop of lawsuits have trapped Coinbase in an era of financial hardships. As per the official shareholder letter, Coinbase recorded a net loss of $1.1 billion by the end of Q2 2022.

The exchange relies more on institutions and retail clients are its major investors. Thus, in early August, Coinbase enabled Ethereum staking service to institutional clients in the US. Additionally, JP Morgan adds up another prediction to the queue. The analyst estimates Coinbase to generate an incremental annual staking revenue of $650 million on account of the Merge.

In an official blog on Tuesday, Coinbase announced that it will pause new Ethereum (ETH) and ERC-20 token deposits and withdrawals as a “precautionary measure.” The team stated that it will update and reflect the stats of the transition onto their systems and ensure trading without any hindrance.

Amid all the tragic events of the crypto winter, the off-chain regulators’ demand for regulations and censorship continues to threaten the crypto community. On Sunday, a “hypothetical” tweet from the founder of a crypto analytics app questioned Coinbase and other crypto protocols such as Lido Finance and Kraken on what they would do if regulators demand to censor the validator nodes. 

Coinbase CEO Brian Armstrong replied that the platform would “shut down the staking service” if such a scenario comes up. 


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