Despite a major investment bank significantly slashing earnings forecasts for Coinbase, it has maintained an 'outperform' rating on the stock, a seemingly contradictory move prompting deeper market consideration of the company's future trajectory. Following the announcement of the reduced expectations, shares of both Coinbase and Circle defied the negative news, rising approximately 3-4%, indicating a market interpretation that the worst is already priced in. The core rationale from William Blair is that current negatives are fully reflected in the share price, and investors should hold on for a recovery once spot cryptocurrency trading volumes bottom in sync with Bitcoin. This contrast of an optimistic rating amid downgraded data solidifies Coinbase's unique position as a narrative anchor in the current market.
William Blair conducted a detailed breakdown of Coinbase's financial model, with the specific adjustment magnitudes revealing the firm's anticipation of short-term pain. Analysts Andrew Jeffrey and Adib Choudhury noted that company earnings are expected to bottom in the second half of 2026, followed by a repair and recovery phase in 2027. Specifically, the firm lowered its 2026 revenue forecast for Coinbase by 12% and its 2027 revenue forecast by 13%; more significantly, the adjusted EBITDA forecasts for both years were slashed by 34%. On trading volume, William Blair expects Coinbase's full-year total volume to decline by about 44% to $669 billion, but to rebound by over 32% in 2027. The firm highlights a structural difference from the 2022 cycle, citing the launch of spot Bitcoin ETFs, continued institutional capital inflows, and a maturing regulatory framework as favorable conditions not present four years ago.
Key Growth Areas identified in the report include Coinbase's Ethereum layer-2 network, Base, which is seen as a potential core profit engine. Additionally, derivatives and prediction markets are expected to further diversify revenue streams, reducing reliance on spot trading. The retail derivatives business alone generated over $200 million in annualized revenue in Q1, showing early success in the diversification strategy.
Diverging Market Views and Technical Signals present a complex picture. Piper Sandler analyst Patrick Moley lowered his price target for COIN from $170 to $155, maintaining a neutral rating. Moley noted that Q2's focus is on prediction markets and perpetual contracts, with World Cup events driving a surge in prediction market size, but cautioned that Q3 will see high focus on potential competitive impacts from perpetual contracts. Year-to-date, COIN shares are down nearly 30%, closely tracking Bitcoin's decline of about 26%. Meanwhile, Circle, which listed on the NYSE in June 2025 at $31, has seen its stock fall 20% since the start of the year.
In technical analysis, John Bollinger, creator of the Bollinger Bands volatility indicator, has consistently noted since early July that Bitcoin's daily chart is forming a crucial bottoming pattern. On July 2, Bollinger posted on social media platform X, pointing out a 'W' double-bottom reversal structure: two lows forming a range with a rebound in between, suggesting that a break above the resistance level between the lows would confirm a bullish trend. He described the current action as a standard fractal structure, with a smaller 'W' bottom nested within the larger pattern, visible on weekly charts as well. However, he objectively noted uncertainty, as several bullish patterns have emerged during this bear market only to be broken by selling pressure. In his latest update, Bollinger stated that if this 'W' bottom completes, it would be seen as a clear signal for a trend reversal, marking his most definitive bullish signal to date, suggesting more than just a short-term bounce. Earlier this year, Bollinger disclosed that his investment vehicle holds a Bitcoin long position, aligning his view with his holdings.
Broader Technical and On-Chain Context shows that Bitcoin's overall bearish structure has not yet reversed, but downward momentum is persistently weakening. On-chain data from Glassnode's latest weekly report indicates that the primary source of market selling pressure this year—panic selling by long-term holders—peaked and began declining two weeks ago. This metric, which filters out internal chain transfers to track actual selling by long-term holders, has shown its first downturn of this cycle. The price lows in June attracted significant buying, with Glassnode monitoring wallets of various sizes accumulating coins. Bitcoin's negative correlation with the US Dollar Index (DXY) has deepened, while its correlation with US stocks continues to weaken, with macro news regaining sensitivity for price moves: Tuesday's softer-than-expected inflation data saw Bitcoin outperform major US stock indices.
The Lingering Question for a Sustained Reversal remains for both on-chain analysts and Wall Street institutions: the Bitcoin spot market has not yet seen sustained buying pressure sufficient to confirm a reversal. While derivative positions are being unwound, long-term selling pressure is gradually easing, and options market fear premiums are narrowing, incremental capital has not entered the market on a large scale. William Blair pinpoints the inflection point in 2027, predicting a 32% rebound in Coinbase trading volume next year following a 44% plunge this year. Despite peaking selling pressure and positive technical formations, the lack of sustained push from new capital means the market is still in a consolidation phase. A genuine reversal may ultimately require a fundamental improvement in the macro liquidity environment.