Investors should buy momentum in Coinbase and Circle, says William Blair

Investment banker William Blair said in a report on Monday that Coinbase (COIN)’s recent weakness is an “air pocket” and not a red flag.

The bank reiterated its outperform rating on the stock and urged investors to treat the cryptocurrency’s decline as a buying opportunity.

Coinbase shares rose 2.6% to $246.53 in early trading.

The report makes a similar argument for Circle (CRCL), which has an outperform rating, despite USDC’s strong market capitalization, which has fallen nearly 80% from its 52-week high.

Because both companies are tied to USDC, William Blair expects their stock prices to move in tandem, positioning Coinbase as a broader cryptocurrency gateway and Circle as a cleaner bet on USDC’s growth, particularly in cross-border B2B payments.

Analysts Andrew Jeffrey and Adib Chowdhury say Bitcoin’s decline hasn’t changed their view. The report blames the volatility on an immature market where concentrated holdings and a rush of first-time exchange-traded fund buyers have exaggerated fluctuations.

Analysts at the bank viewed this as growing pains rather than a theoretical failure, arguing that deeper liquidity and regulatory clarity will ultimately help Bitcoin settle into a mainstream portfolio role.

While a short-term downturn could weigh on Coinbase’s trading revenue, analysts said the company is still building a global derivatives business that will capture U.S. spot share and add diversification to cushion volume declines. With about a third of costs being variable, the company expects Coinbase to be able to manage margins while continuing to invest in the platform.

The report also highlighted that despite the widespread decline in the crypto market, Coinbase’s Subscriptions & Services (S&S) revenue is increasing, currently accounting for approximately 40% of total revenue, supported by a resilient USDC market capitalization of $74 billion.

The bank remains confident in its fourth-quarter S&S forecast of $777 million, driven in part by USDC fees, and says staking revenues should benefit from higher yields and lower redemptions during market drawdowns.

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