The Ethereum Merge is eagerly awaited by the cryptocurrency community, but many stakeholders want to make the most of it. According to Wall Street giant JP Morgan, the much-anticipated update might be highly beneficial for cryptocurrency exchanges. Retail traders, on the other hand, may be hoping to profit from a surge in the price of ETH as soon as it occurs.
JPMorgan anticipates that the Ethereum merger will benefit Coinbase.
According to JPMorgan analyst Kenneth Worthington, Coinbase would “significantly gain” from the highly anticipated Ethereum blockchain Merge upgrade on August 15.
According to an August 17 story, the analyst claims that the cryptocurrency exchange has recently taken substantial steps “to optimize the value of Eth staking for its clients,” which Worthington believes could lead to higher revenue creation for Coinbase.
According to the analyst:
“We see the staking revenue opportunity bigger (proportionally) than the income opportunity given we expect Institutional staking clients will contribute meaningfully to ETH staking revenue, but much less so for Institutional customers. The vast majority of the economics remains with retail.”
Notably, as the Merge approaches, the aggregate value of its staked native currency, ETH, has roughly doubled over the last year, despite its price falling by 43% during the same timeframe.
Many people regard the Ethereum Merge as one of the most significant turning points in the long and turbulent history of cryptocurrencies. According to certain estimates, Coinbase has a 15% market share for ETH assets.
“Coinbase is bigger in [ether] than was intuitive to us, thus leading directly to a bigger revenue opportunity,” the bank wrote. JPMorgan has also assigned a neutral rating and a price objective of $64 to Coinbase shares.
According to Worthington, retail customers “traffic more in the more speculative tokens,” but institutions are definitely overrepresented in Coinbase’s market share because they are more likely to purchase ETH and Bitcoin.
Not Just Coinbase
According to the JP Morgan analyst, in addition to Coinbase, other exchanges such as Binance, Gemini, and FTX will benefit from the Ethereum update. Based on a $2,000 ETH pricing and a 5% yield, we estimate that the Ethereum merger will generate $650 million in additional yearly staking revenue for Coinbase. We anticipate an increase in annual staking income of $80-$100 million.
The Ethereum Merge is scheduled on September 15, however technical changes to the timeline are possible. The upgrade will allow the consensus technique to be changed from Proof of Work to Proof of Stake. The new approach should reduce the amount of energy required for Ethereum mining. Prices have lately risen due to the Merge’s anticipated arrival and preparations.