Mizuho Warns Coinbase's Prediction Market Push Could Cannibalize Crypto Sales
Mizuho Securities analysts have issued a warning that Coinbase's anticipated expansion into prediction markets could cannibalize its crypto sales, as users might fund bets with fresh cash rather than reallocating existing assets. A survey of over 230 Coinbase and Robinhood users revealed that 50% of Robinhood's customers plan to finance prediction-market bets with new cash, compared to 37% of Coinbase customers.
Coinbase is expected to announce several new products on a coming Wednesday, potentially broadening its offerings into areas influenced by platforms like Kalshi and incorporating tokenization. Compass Point analysts have noted tokenized equities as a significant opportunity for Coinbase’s growth.
Despite these prospects, Mizuho highlights softer-than-expected market trends, including Bitcoin's recent decline from an all-time high above $126,000 in October to $87,690 as of Tuesday. Users of Robinhood and Coinbase are reportedly nine times more likely than non-users to engage with prediction markets.
Adding to the sector’s momentum, Intercontinental Exchange (ICE) has invested $2 billion in Polymarket, with CEO Jeffrey Sprecher stating that about half of ICE's 10,000 customers express interest in prediction markets.
Coinbase's stock showed a modest increase of just over 1% to $253, though it has experienced a roughly 10% decline over the past month while remaining modestly higher for the year. Reflecting the expected product push, Mizuho has trimmed Coinbase’s price target to $280 from $320 and maintained a Neutral rating.
