The acquisition of Coinbase (coin) $2.9 billion Delibit has been a turning point for the company, pushing the US-based exchange into direct competition with global heavyweights like Binance, Wall Street analysts wrote Thursday.
Large trading is more than just a platform expansion. This is a paradigm shift in the exchange and trade industry. According to analysts, the transaction marks the start of a new consolidation cycle in the crypto trade industry.
Read more: With a $2.9 billion deal, Coinbase buys DELIBIT to expand in the US crypto options market
Deribit manages 85% of the global crypto options market and reported a trading volume of $1.2 trillion last year. By absorbing it, Coinbase will become the world’s largest crypto-derived platform with open interest and optional activity, Keybanc wrote in the report.
The deal also has a geographical gap, expanding Coinbase’s presence, which generates only 20% of its current revenue, according to Barclay’s Benjamin Buddish.
Oppenheimer called it a “legal threat” to the dominant exchange, noting that Coinbase’s public position gave him the ability to fund acquisitions using stocks, an option that is unavailable to most private companies. The advantage, when combined with $8.5 billion in cash on hand, could turn Coinbase into the most aggressive integration in the space.
The options market is in part attractive as it offers stable volumes throughout the market cycle. Barclays estimates Deribitt’s 2024 revenues are between $425 million and $450 million, suggesting a healthy revenue contribution to Coinbase’s revenue.
Keybanc also called DeLibit’s institutional user base and international footprint a natural extension of Coinbase’s futures and spot products, highlighting its strategic suitability.
Regulatory approval for the transaction remains pending, but analysts hope that Coinbase will offer more colours during its first quarter revenue report on Thursday.
The exchange is expected to overlook Street’s expectations for first quarter revenue as the market rattles with economic uncertainty. Coin’s stocks rose 6.58% on the day, while Bitcoin rose 4.31%.
Read more: Coinbase revenue pain is likely to warn Wall Street analysts as retail activity slumps
