Coinbase stock climbs as Daiwa upgrades to Buy, citing ether-Merge tailwinds (NASDAQ:COIN)

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Coinbase Global (NASDAQ:COIN) shares advanced 6.5% in Friday premarket trading as Daiwa Securities upgraded America’s largest cryptocurrency exchange by trading volume to Buy from Outperform.

The company “should be a key beneficiary of increased ETH staking demand” after ether (ETH-USD) merges to a Proof-of-Stake consensus mechanism from Proof-of-Work in the coming days, Daiwa contended in a note written to clients.

That’s because Coinbase (COIN) is one of the largest ETH holders globally, as it holds nearly 15% of all circulating ethereum (ETH-USD) on its platform, Daiwa pointed out.

Meanwhile, COIN’s total staking revenue is estimated to be $554M in 2023, representing a Y/Y jump of 73%, Daiwa wrote, adding that its staking revenue contribution could increase to 15% in Q4 2023 from 9% in Q2 2022. That would help “the company diversify its revenue away from more-cyclical trading revenue.”

Perhaps the intraday upswing in COIN shares was helped by a broad risk-on day in crypto, with bitcoin (BTC-USD) jumping almost 10% to $20.97K, and ether (ETH-USD) perking up 5.2% to $1.70K at the time of writing.

Earlier this week, Oppenheimer analyst Owen Lau said Coinbase will have a long-term benefit from ether’s Merge.