Bernstein released updated research on three major crypto platforms ahead of third-quarter earnings, maintaining its Outperform rating on Coinbase, Robinhood, and Circle while adjusting financial forecasts across the group.
The brokerage cut its earnings forecast and price target for Coinbase while raising revenue estimates for Robinhood and earnings estimates for Circle. The divergent moves reflect broader shifts in how cryptocurrency companies generate revenue.
Revenue Sources in Transition
According to Bernstein's analysis, spot crypto trading is no longer the primary revenue driver for these platforms. Instead, derivatives trading, prediction markets, and tokenization are becoming increasingly significant.
Robinhood raised its revenue estimates as the brokerage noted that slower spot trading volumes are being offset by growth in derivatives and prediction markets. Robinhood's integration with Kalshi, a regulated prediction market platform, has positioned prediction market revenue to surpass certain lines of its crypto trading business.
Circle received upgraded earnings estimates, with Bernstein tying the improvement to the stablecoin issuer's position in the sector and growth in USDC supply.
Emerging Growth Areas
Bernstein identified three categories driving growth beyond traditional spot trading. Derivatives allow traders to remain active during periods of price stability. Prediction markets attract users interested in outcomes like elections or sports without necessarily purchasing cryptocurrencies. Tokenization, which represents real-world assets as blockchain tokens, is characterized as a longer-term infrastructure opportunity.
Stablecoin Dynamics and Circle's Position
Circle's business model differs from traditional crypto exchanges in that its earnings are more closely tied to USDC supply in circulation than to daily trading volumes. Bernstein pointed to USDC supply growth as a key driver of its improved earnings outlook for the company.
Implications for Earnings Season
The analysis suggests that investors should focus on the composition of revenue across these platforms during upcoming earnings reports rather than raw trading volumes. For Coinbase shareholders, the cut to estimates signals the importance of monitoring revenue diversification. For Robinhood investors, prediction market scaling will be a key metric to track. Circle's outlook depends on continued stablecoin adoption and USDC supply expansion.
