As Coinbase’s (COIN) stock continues its meteoric rise in 2025, analysts at 10x Research have issued a bold recommendation: short Coinbase shares while simultaneously going long on Bitcoin ($BTC ). This classic “pairs trade” strategy is grounded in the belief that Coinbase has become significantly overvalued relative to the underlying crypto market it serves.

The Core Thesis:

10x Research argues that the current valuation of COIN has run ahead of its fundamentals. While Coinbase has benefited from a renewed bull run in crypto markets, with Bitcoin $BTC trading above $100,000, the firm’s stock price has increased at an even faster rate—amplifying its exposure to speculative investor behavior.

“This is a classic decoupling scenario,” said Markus Thielen, head of research at 10x. “The correlation between Coinbase and Bitcoin is breaking down, with COIN now trading at levels that suggest over-exuberance. In our view, a short COIN/long $BTC trade presents a strong risk-adjusted opportunity.”

Valuation Concerns:

Coinbase market cap has surged past $45 billion, driven by increasing volumes and anticipation around crypto ETFs and institutional adoption. However, 10x Research notes that this rally is fueled more by sentiment than sustainable earnings growth. Coinbase remains heavily reliant on transaction fees, which are volatile and directly linked to speculative activity. Unlike Bitcoin—which is seen as a long-term inflation hedge and store of value—Coinbase is a business with operational risk, regulatory exposure, and revenue dependency on market cycles.

Bitcoin’s Structural Strength:

In contrast, Bitcoin’s current rally is backed by structural tailwinds: increasing adoption, rising institutional interest, macroeconomic instability, and expectations of looser monetary policy. Furthermore, Bitcoin’s recent halving has tightened supply, adding upward pressure on price in the face of growing demand.

10x Research believes that Bitcoin’s upside is still undervalued by traditional markets, especially compared to equity-based crypto plays like Coinbase.

The Trade Mechanics:

The proposed trade involves shorting COIN stock—benefiting from a potential price correction—and going long on BTC, ideally via futures or a spot allocation. This strategy seeks to hedge sector-wide sentiment while exploiting relative mispricing.

“You’re not betting against crypto,” Thielen emphasized. “You’re betting that COIN has outpaced the asset it tracks, and that the correction will happen not to Bitcoin, but to its overbought proxies.”

Risks and Considerations:

This strategy is not without risks. Coinbase could continue to outperform if regulatory clarity improves or if retail investor enthusiasm surges again. Additionally, any sharp downturn in BTC could hurt both sides of the trade. As always, timing and risk management are key.

Conclusion:

10x Research’s short COIN/long BTC call taps into a growing narrative in financial markets: that equities tied to digital assets may not always move in sync with the underlying assets themselves. For sophisticated traders, this divergence presents a unique opportunity to profit—if they can navigate the volatility.

As the crypto market evolves and matures, relative value trades like this could become a staple for investors seeking alpha beyond simple long-only exposure.


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