Coinbase (COIN) stock has been under pressure, falling about 29% year-to-date and nearly 20% over the past week.
Now, Goldman Sachs is adding to the caution.
The firm lowered its price target while keeping a Buy rating, signaling a shift in near-term expectations without breaking the long-term thesis.
The reason comes down to one key risk. Regulatory pressure around stablecoin yields is starting to build, and that could impact one of the most important drivers of Coinbase's newer, higher-margin revenue streams.
That leaves investors with a tougher question. If stablecoin economics weaken, can the rest of Coinbase's platform carry the stock?
Coinbase valuation snapshot
Capitalization: $42.5 billion
Enterprise value: $38.8 billion
Share price: $164
Analysts average target price: $251 (53% implied upside)
Expected annual EPS growth in 2 years: 15.0%
Forward P/E ratio: 42.5x
Source:TIKR.com
Goldman Sachs cuts Coinbase price target
Goldman reduced its price target for Coinbase to $235 from $270 while maintaining a Buy rating, indicating a more cautious short-term view without abandoning the long-term thesis.
The downgrade was due to regulatory concerns suggesting that the Clarity Act could limit yields on stablecoins like USDC.
This would be negative for Coinbase because the company is involved in USDC's economics through its partnership with Circle.
Dan Dolev, an analyst from Mizuho, stated that the "Clarity Act could potentially ban yield payments for simply holding a stablecoin and restrict any approach that makes the program in any way equivalent to a bank deposit."
Stablecoin revenue has been one of the main drivers of Coinbase's transition to recurring, higher-margin revenue. If yields become restricted, one of the most attractive aspects of the new model loses its strength.
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Derivatives could help offset stablecoin risk
Derivatives have become a more significant part of Coinbase's business, showing strong growth and market share gains over the past year.
This is important because derivatives drive more frequent and higher-value trading. Spot trading tends to increase during bull markets, while derivatives can support more consistent engagement.
However, this is not guaranteed.
The recent surge in derivatives volume may reflect favorable market conditions rather than a lasting change in user behavior. The key now is whether Coinbase can transform this growth into a sustainable part of its business.
New products are expanding Coinbase's exchange model
In the Q4 earnings call in February, CEO Brian Armstrong mentioned, "We have successfully diversified the business where stablecoins, subscription and services revenue, and now trading of other asset classes like stocks, prediction markets, and commodities means our revenue is less correlated to crypto price fluctuations."
Early Q1 activity showed strength in DEX-enabled trading, prediction markets, and even newer areas like gold and silver.
If these products gain traction, Coinbase will start to resemble more of an "everything exchange" rather than a single-asset platform.
The broader industry trend towards building a full-stack crypto platform
Coinbase's expansion beyond spot trading is part of a wider trend across crypto platforms. Exchanges are shifting towards full-stack models, with more revenue coming from derivatives, stablecoins, subscriptions, and on-chain services rather than one-time trading fees.
This shift is now central to the narrative.
Robinhood (HOOD) provides a useful comparison. Its crypto business benefits from increased trading activity, but the broader strategy is constructing a multi-product platform that engages users across a variety of asset classes and services.
Coinbase is following a similar strategy with prediction markets, metals, and subscription products to reduce dependence on a single trading scenario.
This makes platform breadth not only a growth tool but also a retention tool. The more reasons users have to stay, the lower the risk of revenue disruptions when one market cools down.
Kraken (KRKNF) remains one of the most direct competitors. Like Coinbase, it has delved deeper into derivatives and expanded platform functionalities, reflecting the industry's belief that spot trading alone is too cyclical to sustain lasting growth.
Coinbase's strategy increasingly resembles an effort to encompass more of that model within a U.S.-regulated framework.
Factors that could drive Coinbase's growth
Derivatives market share gains increase engagement and reduce reliance on spot fees.
Higher USDC balances enhance stablecoin revenue with robust margins.
Coinbase One's growth boosts recurring revenue and decreases churn.
DEX trading maintains on-platform volume as activity shifts on-chain.
New markets like predictions and metals enhance retention.
Increased recurring revenue supports multiple expansion.
Factors that could hinder the bullish scenario
Regulatory pressure on stablecoin yields limits monetization.
Slowdown in spot trading before new products scale.
Fading momentum in derivatives if it was driven by specific events.
New products drive usage but have weak monetization.
Decline in USDC balances due to shifts in yields or competition.
Expansion of product offerings raises costs and squeezes margins.
Competitors gain share in derivatives and on-chain trading.
Main takeaway for Coinbase
The recent decline in Coinbase's stock price and Goldman Sachs' target reduction indicate a shift in short-term expectations, but not necessarily a break in the long-term narrative.
If stablecoin economics deteriorate, Coinbase will need the other parts of its platform to bear more weight.
Here's what's important next:
Can subscription and services continue growing as spot volumes stabilize?
Can derivatives gains make transaction revenue less cyclical?
Are new products actually driving monetization and retention?
If these elements expand, Coinbase could evolve into a more diversified platform. If not, the business could remain tied to the same cycles it aims to transcend.
Related: Jim Cramer resets Nio stock outlook after earnings
This story was originally published by TheStreet on Mar 31, 2026, where it first appeared in the Investing section. Add TheStreet as a Preferred Source by clicking here.
