By Sam Boughedda
Mizuho Securities analysts said in a note to investors on Monday that Coinbase's (NASDAQ:COIN) "parsimonious" APY of 15bps on stablecoin balances may be driving customers to higher-yielding alternatives.
The analysts, who have a Neutral rating and $42 price target on the stock, pointed to alternatives such as SoFi at 2.5% as an example.
"As evidence, USDC outflows appear to be worsening, driving a persistent decline in USDC market cap to more than 20% below peak. This may mean that the recent boost to COIN's interest income could be short-lived," wrote the analysts. "Troubles come in battalions. Early October crypto volumes point to subdued activity on the COIN platform whilst share losses continue to linger."
They believe the rise in US stablecoin, alongside Coinbase's revenue-sharing agreement with Circle, has helped boost interest income in recent quarters. However, USDC outflows may weigh on future interest income.