After Ben’s Roman Storm trial coverage yesterday, Casey is at the courthouse for closing arguments. Felix was monitoring the FOMC rate decision, and on top of all that, we’ll be sifting through the White House’s crypto report.

But first, Ben breaks down what analysts and investors will be listening for when Coinbase reveals its Q2 results tomorrow. Let’s get into it:

A nuanced COIN outlook

Despite Coinbase’s second quarter milestones, not all is rosy for the crypto exchange as it gets set to discuss its Q2 results tomorrow.

Coinbase’s stock price roughly doubled during the quarter — performance Oppenheimer analysts attributed to its S&P 500 inclusion and progress around the GENIUS Act (leading to its ultimate passage earlier this month).

COIN shares were trading around $382 on Wednesday at 1:30 pm ET — up 9% from a month ago. 

And yet, in other ways, COIN’s set-up ahead of the quarterly print is “unfavorable,” Oppenheimer’s Owen Lau and Guru Sidaarth wrote in a note. They estimate Coinbase’s Q2 trading volume to be ~$220 billion, marking a 44% decline from the prior quarter.

Morningstar analyst Michael Miller noted transaction volume will always be a key data point given transactions account for Coinbase’s largest revenue stream.  

Beyond that, though, Miller will be listening for commentary on pricing pressure (or lack thereof) as competitors like Robinhood ramp up their crypto offerings in a friendlier regulatory environment. 

“I’ll also be looking for any data or commentary on the firm’s Base transaction volume and revenue and how much USDC is on the firm’s platform and products,” Miller told me. “While Coinbase is still heavily exposed to cryptocurrency trading, USDC and Base have enjoyed a lot of momentum this year.”

Miller, in a Monday note, revealed he had increased his COIN “fair value estimate” from $170 to $205. A part of that was indeed due to USDC’s market cap eclipsing $60 billion and overall bullish sentiment after the stablecoin-focused GENIUS Act became law. If you forgot, Coinbase earns interest income on the USDC it holds on its platform.

Despite Miller’s COIN upgrade, he still considers shares “significantly overvalued” as the market reacts to recent crypto price surges. 

The Oppenheimer analysts see things a bit differently. They have a COIN price target (in the next 12-18 months) of $417.

Lau and Sidaarth note Coinbase’s US derivatives and International Exchange notional values were more resilient than spot trading volume — up 22% and 28%, respectively, quarter over quarter. That’s an area they’re more focused on after Coinbase’s Deribit acquisition. 

Maybe Coinbase CEO Brian Armstrong will give us a sense of other possible acquisition targets. As far as link-ups go, Coinbase on Wednesday revealed a partnership with JPMorgan Chase that lets Chase customers link their bank accounts to Coinbase wallets.  

Lau told me he’ll be seeking expense guidance from Coinbase executives tomorrow, as well as any update on July trading revenue. 

Coinbase is pretty connected in DC, and could also offer thoughts around when they expect the CLARITY Act to become law. That bill, which would create a definition for “digital commodities,” got the House’s blessing on July 17.

“Passage of the CLARITY Act will support Altcoin Summer, following the Stablecoin Summer after the passage of the GENIUS Act,” Lau explained.

Add it to the list of things we’re monitoring. Never a dull moment.

— Ben Strack

Institutional interest in Ethereum is running hot. ETF flows are gaining momentum, new token acquisition vehicles are forming every week, and ecosystem morale is nearing ATHs. 

The only question left: Where will $ETH be when DAS London kicks off this October?

Get your tickets today with promo code: FGNL

📅 October 13-15 | London

• Closing arguments in the trial against Tornado Cash co-founder Roman Storm continued into the afternoon. Keep an eye on Blockworks.co for updates.

• Felix will take over the newsletter tomorrow, and you can be sure he’ll have something to say about today’s FOMC meeting. In the meantime, check out his livestream. 

• US ether ETFs tallied net inflows for an 18th straight day Tuesday. Those products have attracted more than $5.3 billion of net capital over that span. (Ben’s piece from yesterday, if you missed it).
  
  — Ben Strack