Compass Point analyst Ed Engel reiterated a Sell rating on Coinbase Global (NASDAQ: COIN) on June 1, 2026, setting a $140 price target that implies roughly 23% downside from the stock’s current trading price of $180.86. The call centers on a wave of derivatives competition that Engel argues will erode the exchange’s pricing power and squeeze margins.
Compass Point Doubles Down on Sell Rating
COIN was trading at $180.86, down approximately 2.6% on the day the note was published. The stock has fallen roughly 27% over the prior six months and trades at a 63.4x earnings multiple, with nine analysts revising earnings estimates downward for the upcoming period.
Compass Point — Sell Rating · June 1, 2026
Compass Point cited rising derivatives competition — Kalshi, CME 24/7 futures, Kraken, Robinhood, and potential Binance U.S. entry — as structural headwinds limiting Coinbase’s pricing power. COIN trades at a 63.4× earnings multiple and is down ~27% over six months.
Source: Decrypt · Investing.com
Engel’s note arrives days after a flurry of regulatory action. On May 29, the CFTC announced that Kalshi would list perpetual futures on Bitcoin, that Coinbase U.S. users would gain access to Deribit’s offshore derivatives platform, and that CME would expand crypto futures and index options trading to 24/7 from 24/5.
Coinbase completed its $2.9 billion acquisition of Deribit and secured CFTC regulatory relief to offer offshore crypto perpetuals through that subsidiary. But Compass Point views the broader regulatory opening as a net negative for the exchange.
Why Derivatives Competition Threatens Coinbase’s Margins
The core of Engel’s thesis is a cannibalization problem. Coinbase earned $50 million in perpetual futures revenue during Q1 2026, but retail trading revenue simultaneously dropped to its lowest level since Q3 2024. Perps are growing, but they appear to be consuming higher-margin spot trading activity.
“Competition and low switching costs limit COIN’s ability to exert pricing power relative to spot trading, particularly among more sophisticated users that are most likely to trade these products.”
Ed Engel, Compass Point
Engel also flagged U.S. leverage restrictions as a structural disadvantage. Domestic perpetual futures products cannot match the leverage ratios available on offshore venues, limiting their appeal to the power traders who generate the most volume.
“We view the U.S. regulatory expansion as a negative driver for COIN’s market share and pricing power longer-term,” Engel wrote, citing the gap between onshore and offshore trading conditions.
The competitive field is widening fast. Beyond Kalshi and CME, both Kraken and Robinhood have announced perps rollouts, while Interactive Brokers is integrating with Kalshi and Bullish. A potential Binance re-entry into the U.S. market under the current pro-crypto regulatory stance represents what Compass Point considers a significant long-term tail risk.
Analysts Split on COIN’s Direction
Not everyone agrees with Compass Point’s bearish outlook. Canaccord Genuity maintains a Buy rating with a $300 price target, more than double Engel’s $140 figure. Benchmark recently raised its target to $270, while Mizuho lifted its target to $200 from $170.
The result is an unusually wide analyst spread. The gap between the most bullish target ($300) and Compass Point’s $140 represents a 114% divergence, reflecting deep disagreement over whether the derivatives expansion is a growth catalyst or a margin trap for Coinbase.
The broader crypto market is not offering much comfort. The Fear & Greed Index sits at 29, firmly in “Fear” territory, aligning with the risk-off sentiment that has dragged COIN down over the past six months.
For traders watching COIN, the key question is whether Coinbase’s Deribit acquisition and CFTC relief can generate enough derivatives revenue to offset the spot trading decline before competitors like Kalshi and CME absorb market share. With institutional positioning shifting across crypto markets, the next quarterly earnings report will be a critical test of the bull and bear cases alike.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency and digital asset markets carry significant risk. Always do your own research before making decisions.
