Wall Street Analysts View Coinbase’s $2.9B Acquisition of Deribit as a Serious Challenge for Competitors

Coinbase’s acquisition of Deribit for $2.9 billion marks a significant milestone for the U.S. exchange, positioning it to compete with industry giants like Binance, according to analysts.

This substantial transaction goes beyond merely enhancing Coinbase’s platform; it represents a transformative moment in both the exchange landscape and the trading arena. Analysts assert that this move signifies the onset of a new trend of consolidation within the cryptocurrency trading sector, as smaller platforms encounter increasing challenges and traditional finance companies seek deeper investments in the industry.

Deribit, which commands 85% of the global crypto options market, recorded a staggering $1.2 trillion in trading volume last year. By integrating Deribit, Coinbase will establish itself as the foremost crypto derivatives platform worldwide in terms of open interest and options trading, as highlighted in a report by KeyBanc.

Moreover, this acquisition helps fill a geographical gap, increasing Coinbase’s international footprint at a time when only 20% of its revenue is derived from overseas markets, according to Barclay’s analyst Benjamin Buddish.

Oppenheimer characterized the acquisition as a “legitimate threat” to other leading exchanges, emphasizing that Coinbase’s public company status allows it to utilize stock for financing, a method that private firms typically lack. With $8.5 billion in cash reserves, Coinbase stands poised to become a proactive consolidator in the marketplace.

The appeal of options markets is partly attributed to their capacity to maintain stable trading volumes amid varying market conditions. Forecasts from Barclays suggest that Deribit will generate between $425 million and $450 million in revenue by 2024, indicating a robust potential addition to Coinbase’s financial performance.

KeyBanc further underscored the strategic alignment of Deribit with Coinbase’s existing offerings, noting that its institutional client base and global reach are a natural progression for Coinbase’s futures and spot trading products.

At this stage, the deal awaits regulatory approval, with analysts anticipating that Coinbase will share more details during its earnings call for the first quarter on Thursday.

Expectations are that Coinbase may underperform market expectations for the first quarter, as the economic landscape poses uncertainties. On the day of the announcement, COIN shares increased by 6.58%, while Bitcoin appreciated by 4.31%.