Compass Point reiterates Coinbase bearish rating, citing increased derivatives competition

June 2nd, according to Decrypt, Compass Point analysts reiterated their bearish rating on Coinbase with a target price of $140, warning that intense competition in the derivatives space will squeeze Coinbase's profit margins. Analysts pointed out that although Coinbase has obtained regulatory approval through its subsidiary Deribit to offer offshore crypto perpetual contracts to US users, the potential entry of Kalshi and Binance exacerbates the risks. Fierce competition and low user switching costs limit Coinbase's pricing power relative to spot trading, especially among high-net-worth individuals who are most likely to trade these products. Coinbase's perpetual contract revenue reached $50 million in the first quarter, but retail trading revenue in the same period fell to its lowest point since the third quarter of 2024, which analysts believe indicates signs of cannibalization within the company's business. Compass Point stated that the CFTC may approve Americans trading on offshore platforms like Hyperliquid or Binance in the future, posing a growing risk. Analysts also noted that the Trump family's connection to Binance through World Liberty Financial's USD1 stablecoin could increase Binance's chances of gaining access in the US.