JP Morgan Predictions: Ethereum Incorporates a Ray of Hope for Coinbase

  • JP Morgan estimates Coinbase will generate $650 million in annual profits.
  • Coinbase will pause new ETH deposits and withdrawals during the merger.

Consolidation, Ethereum’s transition from PoW to PoS, is just around the corner. Thus, the entire DeFi space is preparing for this upgrade scheduled for September 15th. A series of hypotheses and predictions about the impact of this event. Notably, New York-based investment bank JPMorgan predicts a bullish future for Coinbase due to the Ethereum consolidation.

In a note to investors, Kenneth Worthington, a senior analyst at JPMorgan, anticipates a “greater revenue opportunity” for the crypto exchange from its Ether (ETH) holdings and ETH betting service. Coinbase has a strong position in the ETH holdings by hosting 15% of the market share in ether (ETH).

Expected recovery

Accusations of insider trading, listings of unrecorded assets, a significant drop in second-quarter revenue, stock drops, layoffs, and a string of lawsuits have locked Coinbase into an era of financial hardship. According to the official shareholder letter, Coinbase recorded a net loss of $1.1 billion by the end of the second quarter of 2022.

The exchange relies more on institutions and retail clients are its main investors. Thus, in early August, Coinbase enabled Ethereum staking service for institutional clients in the United States. In addition, JP Morgan is adding another expectation to the waiting list. The analyst estimates that Coinbase will generate an additional $650 million in annual stake revenue on the consolidation account.

In an official blog post on Tuesday, Coinbase announced that it will be temporarily halting deposits and withdrawals of new Ethereum (ETH) and ERC-20 tokens “as a precaution.” The team stated that it will update and reflect the transition stats to its systems and ensure unhindered trading.

Amid all the disastrous events of the crypto winter, off-chain regulators’ demand for regulation and oversight continues to threaten the crypto community. On Sunday, a “virtual” tweet from the founder of crypto-analytics app Coinbase and other crypto protocols such as Lido Finance and Kraken questioned what they would do if regulators demanded censorship of the validator contract.

Coinbase CEO Brian Armstrong responded that the platform would “close staking” if such a scenario emerged.

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