Bernstein Predicts $16B of Buying Pressure on Coinbase Shares After S&P 500 Index Inclusion

Coinbase’s S&P 500 Inclusion Sparks $16B in Potential Buying Pressure

Coinbase (COIN) jumped 16% early Tuesday following the announcement that it would be added to the S&P 500 index, marking a significant milestone for the cryptocurrency exchange.

The exchange will officially join the S&P 500 after the close of trading on Friday, replacing Discover Financial Services (DFS), which is being acquired by Capital One (COF).

Bernstein, a leading Wall Street brokerage, estimates that Coinbase’s inclusion could result in around $16 billion in buying demand. Approximately $9 billion of this is expected to come from passive funds that track the S&P 500, while the remaining $7 billion is anticipated from active funds adjusting their positions.

Coinbase becomes the “first and only crypto company to be added to the S&P 500,” as noted by analysts led by Gautam Chhugani. Chhugani maintains an outperform rating on Coinbase shares with a target price of $310, implying a 30% upside from the current $240.

Investment bank KBW predicts that S&P 500 passive funds will need to purchase 36 million Coinbase shares to match the index’s weighting, which would be about four days’ worth of average volume. Additionally, KBW pointed out that as of April 30, roughly 9.9 million Coinbase shares were held short, equating to about 1.4 days’ worth of shares to cover.

Historically, companies added to the S&P 500 since 2017 have experienced an average post-announcement return of 5.2%, and Coinbase’s inclusion could pave the way for more cryptocurrency firms to join the index in the future.