While Coinbase Global Inc (NASDAQ:COIN) is often viewed through the lens of crypto volatility and Bitcoin (CRYPTO: BTC) price swings, investors may also want to look elsewhere – namely, at the quietly explosive partnership with Circle and its stablecoin USDC (CRYPTO: USDC).
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Bitcoin Who? COIN's Real Edge May Be Circle
According to JPMorgan analyst Kenneth B. Worthington, investors may be underestimating how deeply embedded—and profitable—USDC has become for Coinbase.
"We see USDC economics as particularly attractive," he notes, pointing to eye-popping margins and a highly effective growth strategy hiding in plain sight.
USDC: The Golden Goose That Pays To Grow
In the first quarter, Coinbase received approximately $300 million in USDC distribution payments from Circle, more than Circle's own firmwide net revenue of approximately $230 million. The kicker? Coinbase enjoyed a jaw-dropping 66% margin on that USDC income, per Worthington's estimates.
But perhaps the most striking detail is Coinbase's ability to turn those Circle payouts into an aggressive customer acquisition machine. Through high USDC yields offered to customers—funded by Circle—Coinbase effectively pays users to join and stay, while bearing no real cost itself. Worthington calls it a “negative cost” customer acquisition tool, an investor's dream scenario.
Platform & Beyond: Coinbase's Expanding USDC Empire
Coinbase held around $13 billion in USDC on-platform at the end of the first quarter, generating $125 million in revenue with 20-25% margins. Off-platform, the story gets even better. Coinbase splits Circle Reserve Fund income 50/50, earning ~$170 million with near-100% margins, thanks to zero incremental costs.
With Circle recently valued at $50 billion, JPMorgan estimates the total value of these USDC-driven economics to Coinbase shareholders at a substantial $55 billion to $60 billion.
As Bitcoin grabs headlines, Coinbase's real value may lie in the boring, stable, and highly profitable world of USDC. For now, Coinbase isn't just riding crypto waves—it's minting them.
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