US crypto industry boom spurs growing rivalry among two exchange giants

Bernstein analysts outlined their investment case. They see Coinbase shares soaring to $300 in the next 12 months, a 63% surge from yesterday's closing price of $190.38.

Bernstein analysts have highlighted their investment case for Coinbase (NASDAQ:COIN) and Robinhood (NASDAQ:HOOD), elaborating on why they prefer the former for its dominant market share in the US crypto industry and the latter for its impressive product pipeline.

The analysts, who rate Coinbase Outperform with a $310 price target, believe the stock could surge by 63% from yesterday's closing price of $190.38 to reach $310 in the next 12 months. They also rate Robinhood Outperform with a $105 price target, implying more than double from its current price of $43.66.

"We answer the most asked investor question - COIN vs HOOD? We like both, but for different things," the analysts wrote in an investor note.

"Investors consider COIN a simple crypto trading thesis, and are concerned on rising competition impacting margins. COIN is dominant in the US, and has a broad product suite to drive non-trading revenues, and new trading products to support volumes and margins."

President Donald Trump wants to make America the world's crypto capital, and combined with a growing share of trading volumes, "Coinbase remains the dominant platform to ride the tailwinds."

New trading products such as perpetual futures are likely to be approved in the US, Bernstein wrote, while non-trading subscription and service revenues will jump 31%, on a compound annual growth rate over the next two years.

Meanwhile, stablecoins, staking services and other services will drive growth.

Regulatory clarity will bring more competition from fintechs, brokers, and banks, Bernstein said.

"However, we expect, a strong bull market and rising US onshore dominance to more than offset any competitive market share and pricing pressures."

As for Robinhood, the analysts noted that the stock is better liked by investors with limited pushback.

"Several investors booked profits post the blockbuster 4Q and are now looking for fresh entries. As regularity clarity emerges, we expect HOOD to launch new tokens on the primary platform from its current 25."

Coinbase lists more than 250, it noted.

Robinhood will also launch staking and stablecoins, which combined accounted for about 25% of Coinbase's revenue last year.

Robinhood's acquisition of crypto exchange Bitstamp, announced in June, will also fuel gains.

Some 100 tokens are listed on Bitstamp, and the integration will "lead to HOOD's entry in the global exchange space, driving new revenues in global retail and institutional trading, derivatives, staking and stablecoins."