On Sep. 16, the Federal Reserve raised the interest rates by 25 basis points to the 3.75%-4.00% range. It was the first time since 2023 that the Fed had hiked the rates. The central bank said
On Sep. 16, the Federal Reserve raised the interest rates by 25 basis points to the 3.75%-4.00% range.
It was the first time since 2023 that the Fed had hiked the rates. The central bank said it took the decision to contain inflation, which it said still remains "elevated."
The decision prompted the Bank of America to raise its price target on a beaten-down stock.
Related: Bank of America upgrades blockchain lending stock with 58% price target hike
Founded by Brian Armstrong and Fred Ehrsam in 2012, Coinbase Global (Nasdaq: COIN) is the leading cryptocurrency trading exchange in the United States.
The firm, which went public in 2021, became the first pure-play crypto company to join the much-coveted S&P 500 index in May 2025.
Coinbase CEO Brian Armstrong (R) as U.S. President Donald Trump looks on speaks during a summit of crypto and technology leaders in the Roosevelt Room of the White House on August 19, 2026 in Washington, DC.
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The slump in the crypto market over the past year has impacted the Coinbase stock too.
Nearly a year ago, Bitcoin (BTC) — the benchmark cryptocurrency — hit the all-time high (ATH) of $126,080, but the Oct. 10 flash crash wiped out the gains, and it is yet to recover from the shock.
As the world's largest Bitcoin custodian, Coinbase stock also suffered a similar fate.
The COIN stock, which hit the ATH of $444.65 on July 18, 2025, currently trades around 60% lower at $185.38.
The stock is around 18% down in 2026 and more than 50% down from a year earlier.
Yet, the Bank of America decided to raise its price target on the Coinbase stock, and the trigger was the Fed's September rate hike.
It seems like an unlikely connection at first, but once you understand Coinbase's business model, the price target hike begins to make sense.
Coinbase is a partner of the Circle Internet Group (NYSE: CRCL), another prominent crypto company best known for its USDC stablecoin.
Related: Explained: What is a stablecoin?
A stablecoin is a type of cryptocurrency that tries to keep its value stable by being pegged to a so-called stable currency. The most common type is the one pegged 1:1 to the U.S. dollar, earning the moniker "digital dollar."
As per the onchain analytics platform DeFiLlama, the USDC market cap has surged from around $500 million in early 2020 to around $75 billion currently.
USDC market cap, Source: DeFiLlamaCoinbase partnered with Circle in 2018 to make the USDC available to its users. In short, Circle issued USDC and Coinbase circulated it.
For distributing USDC, Coinbase generates revenue from the yields on the stablecoin's reserves, such as short-term U.S. Treasuries.
The Fed's rate hike last month means higher yields on the USDC reserves. This directly translates into an increase in income for the primary USDC distributor, Coinbase.
Roundtable and Coinbase Launch Strategic Partnership To Settle Real-Time, AI/DeFi Payments for $200 Billion Professional Media Industry (7:45)In simple words, a higher interest rate means higher stablecoin revenue for Coinbase — this is exactly what the Bank of America expects.
On Oct. 5, the Wall Street giant raised its price target on the COIN stock from $174 to $203 and maintained a Buy rating, reflecting higher stablecoin revenue forecasts.
The $203 target is based on a 30x multiple on the firm’s 2028 earnings per share (EPS) estimate. It means the bank expects Coinbase to generate an EPS of $6.77 in 2028.
However, it lowered its Q3 2026 and full-year 2026 EPS estimates from -$0.22 and -$0.71 to -$0.24 and -$0.73 due to lower trading volumes.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments are highly volatile and risky. Always conduct your own research before making any investment decisions.
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