Coinbase to Join S&P 500, Shares Rally: ETFs to Buy

Coinbase Global COIN is set to enter the S&P 500 Index on May 19, replacing Discover Financial Services, which is in the process of being acquired by Capital One Financial. The stock soared 24% on the news, marking the sharpest rally since the day after President Donald Trump’s election victory.

In fact, Coinbase has now become the first digital asset player to be included in the benchmark S&P 500 index. Investors could tap the opportune moment with the help of the ETFs having a substantial allocation to the largest U.S. cryptocurrency exchange. These include First Trust SkyBridge Crypto Industry & Digital Economy ETF CRPT, Global X Blockchain ETF BKCH, Fidelity Crypto Industry and Digital Payments ETF FDIG, iShares Blockchain and Tech ETF IBLC and Bitwise Crypto Industry Innovators ETF BITQ.

What Does This Mean for COIN?

Coinbase's addition to the S&P 500 underscores a broader acceptance of cryptocurrency-related companies in mainstream finance. The move will attract new investors to the company, who would indirectly purchase the company through financial products invested in the S&P 500. 

Several analysts believe the move could drive billions of dollars in fresh capital into COIN stock. Bernstein projects that Coinbase could see up to $16 billion in capital inflows as a direct result of its S&P 500 entry, with a substantial portion coming from passive index funds. Oppenheimer raised the price target for Coinbase to $293 from $269, while maintaining an Outperform rating. 

Solid Growth Prospects

Since going public through a direct listing in 2021, Coinbase has become increasingly integrated into the U.S. financial system, driven by Bitcoin’s surge in value and regulatory approval for major institutions to launch spot bitcoin ETFs (read: Bitcoin Tops $102K for First Time Since January: ETFs in Focus).

The largest U.S. cryptocurrency exchange topped earnings estimates for the first quarter of 2025 while lagging on revenues when it reports last week. It posted earnings per share of $1.94, beating the Zacks Consensus Estimate by 4.9% and increasing 7.6% year over year. Revenues increased 24% year over year to $2.0 billion but missed the Zacks Consensus Estimate by 4.1%. 

The potential acquisition of Dubai-based Deribit, a major crypto derivatives exchange, for $2.9 billion will provide a boost to the growth and profitability of Coinbase. The transaction, expected to be closed by the end of the year, positions Coinbase as an international leader in crypto derivatives by open interest and options volume. Notably, Deribit is the world’s biggest trading platform for bitcoin options. The deal is the largest in the crypto industry to date.

ETFs to Buy

First Trust SkyBridge Crypto Industry & Digital Economy ETF (CRPT)

First Trust SkyBridge Crypto Industry and Digital Economy ETF is designed to provide exposure to companies that SkyBridge believes are driving cryptocurrency, crypto assets and digital economies-related innovation. SkyBridge identifies securities primarily via “bottom up” research focused on finding companies leading in the crypto industry ecosystem. First Trust SkyBridge Crypto Industry & Digital Economy ETF holds 25 stocks in its basket, with Coinbase occupying the second position at 17.8% share.

First Trust SkyBridge Crypto Industry & Digital Economy ETF charges 85 bps in fees per year from investors. It has amassed $99.5 million in its asset base and trades in an average daily volume of 45,000 shares. 

Global X Blockchain ETF (BKCH)

Global X Blockchain ETF seeks to invest in companies positioned to benefit from the increased adoption of blockchain technology, including companies in digital asset mining, blockchain and digital asset transactions, blockchain applications, blockchain and digital asset hardware, and blockchain and digital asset integration. Global X Blockchain ETF follows the Solactive Blockchain Index and holds 28 stocks in its basket. Here, Coinbase is the top firm, accounting for 12.5% of the assets.

Global X Blockchain ETF has gathered $142.1 million in its asset base and trades in an average daily volume of 53,000 shares. It charges 50 bps in annual fees (read: Tariff Relief Boosts Tech ETFs: Is More Upside Ahead?).

Fidelity Crypto Industry and Digital Payments ETF (FDIG)

Fidelity Crypto Industry and Digital Payments ETF offers exposure to companies engaged in activities related to cryptocurrency, blockchain technology and digital payments processing. It tracks the Fidelity Crypto Industry and Digital Payments Index and holds 63 stocks in its basket. Coinbase takes the top spot with a 13.7% share.

Fidelity Crypto Industry and Digital Payments ETF has accumulated $151.4 million in its asset base and trades in an average daily volume of 35,000 shares. It charges 40 bps in annual fees.

iShares Blockchain and Tech ETF (IBLC)

iShares Blockchain and Tech ETF seeks exposure to a wide variety of companies that are involved in the development, innovation and utilization of blockchain and crypto technologies. It follows the NYSE FactSet Global Blockchain Technologies Index and holds 36 stocks in its basket.

iShares Blockchain and Tech ETF has gathered $32.3 million in its asset base and charges 47 bps in annual fees. It trades in a volume of 7,000 shares per day on average.

Bitwise Crypto Industry Innovators ETF (BITQ) 

Bitwise Crypto Industry Innovators ETF offers exposure to the companies leading the new crypto economy. It tracks the Bitwise Crypto Innovators 30 Index, which measures the performance of the companies involved in servicing the cryptocurrency markets, including crypto mining firms, crypto mining equipment suppliers, crypto financial services companies, or other financial institutions servicing primarily crypto-related clientele. 

Holding 30 stocks in its basket, Coinbase takes the second spot at 10.2% of the assets. Bitwise Crypto Industry Innovators ETF charges 85 bps in annual fees from investors and trades in an average daily volume of 93,000 shares. Bitwise Crypto Industry Innovators ETF has attracted $179.9 million in its asset base.

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This article originally published on Zacks Investment Research (zacks.com).

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