KBW, an investment bank, has increased its price target for Coinbase stock from $160 to $230. This reflects their confidence in the cryptocurrency exchange’s potential for growth in the expanding market. Even though they have maintained a “market perform” rating, KBW’s analysts see a promising opportunity for Coinbase to generate significant revenue in the near future.

In their research report, KBW analysts, led by Kyle Voigt, highlighted several factors that support Coinbase’s positive outlook. These include a rise in USD Coin (USDC) outstanding balances, a surge in crypto asset levels, and a rebound in retail engagement.

One notable factor is the significant increase in the dollarized supply of USDC, which has risen by 32% in the first quarter alone. As USDC is pegged to the US dollar and issued by Circle, a company affiliated with Coinbase, the exchange earns a gross interest income by holding 56% of their USDC balances.

Moreover, Coinbase’s stock has been boosted by high trading volumes, with an average daily volume of $5.1 billion in March, up from $2.4 billion in February.

However, analysts also note that Coinbase’s ongoing legal battle with the SEC and regulatory uncertainty may deter institutional investors from considering the stock. Despite this, KBW’s decision to raise their price target by $7 demonstrates their confidence in Coinbase’s potential for growth in the cryptocurrency industry.

As the digital currency space continues to evolve, Coinbase’s position as a leading exchange presents an attractive investment opportunity for those willing to navigate regulatory challenges.

In other news, Coinbase’s Base Network has achieved a total value locked (TVL) of $2.5 billion after the recent Dencun upgrade. This further solidifies Coinbase’s role as a major player in the cryptocurrency market.