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Coinbase (COIN) and Circle (CRCL) shares rose sharply on Thursday as both the crypto exchange and the stablecoin issuer emerged as major winners of growing enthusiasm around digital tokens.
Coinbase is on track to notch its first all-time high since November 2021. The stock has surged 40% since the Senate passed the GENIUS Act last week. The landmark legislation is aimed at establishing a regulatory framework for stablecoins, digital tokens backed by assets such as the US dollar and short-term treasuries.
Bernstein analyst Gautam Chhugani this week dubbed Coinbase the "Amazon of crypto financial services." His team raised their price target on the stock to a Street high of $510 from $310, with an Outperform rating.
On Thursday, Coinbase stock traded near $375.
What analysts like: Coinbase has built a suite of crypto financial services beyond trading, including the stablecoin industry. Earlier this month, shopping platform Shopify (SHOP) partnered with Coinbase and payment processing company Stripe (STRI.PVT) to launch digital wallet stablecoin payments, allowing merchants to accept the tokens globally.
Read more about Coinbase and Circle's stock moves and today's market action.
Meanwhile, shares of Circle, of which Coinbase owns a minority stake, have also soared.
The stock is now up more than 620% from its IPO price of $31 per share as investors bet on the rapid global adoption of the company's flagship product, USDC stablecoins.
"We view Circle as a top-tier crypto 'disruptor' with a sizeable future opportunity," Jeff Cantwell wrote last week. The firm sees "the stablecoin 'market cap' potentially reaching $2T over the longer-term, from roughly $260B today."
Momentum around Circle has also been fueled by a wave of new stablecoin initiatives from major financial players.
Read more: Can you buy crypto with a credit card? See the pros and cons.
On Monday, fintech firm Fiserv (FI) announced plans to launch a digital asset platform, including a new stablecoin (FIUSD) by the end of this year using existing infrastructure from issuers Paxos and Circle.
One analyst, however, warned of possible share price pressures later this year as competition in the stablecoin space intensifies.
"We expect competition to accelerate after stablecoin legislation passes," Compass Point analyst Ed Engel wrote in a note Tuesday. "This influx of competition could reduce long-term market share expectations and pressure CRCL shares in 2025."
Engel and his team initiated coverage of the stock with a Neutral rating and $205 price target.
