Senior analyst says Coinbase is a clear winner over Circle

Coinbase is becoming a better investment than Circle after the stablecoin issuer's highly anticipated but contentious public debut, said Mizuho Securities senior analyst Dan Dolev.

Mizuho Financial Group, Inc. is one of Japan's biggest "megabanks" and is also a Global Systemically Important Bank. It has companies that provide retail and corporate banking, investment banking, asset management, and other financial services across the world.

Dolev told CNBC that Circle's post-IPO value seemed too high since investors are assuming a 40% compound annual growth rate that "is not moving" in the real data. He said, "You have these really high ambitions, but the reality is it's not materializing."

Dolev said that the recent change in U.S. government policy has made it easier for stablecoins to be used, but that Circle's USDC has not been adopted as much as investors had hoped.

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The stablecoin is primarily being used to settle crypto and Bitcoin transactions on Coinbase — a dynamic that significantly benefits Coinbase's bottom line more than Circle's.

When asked if he prefers Coinbase more than Circle, he replied, "Yes, 100%". According to Dolev, Coinbase has the upper hand.

"They're getting 100% of all the coins that are on their platform and 50% of the coins that are not on their platform. So they're basically getting paid either way," explained Dolev.

The analysts showed that the market as a whole is uncertain whether Circle can expand beyond specialist use cases into mainstream consumer use.

The IPO shows that there is a lot of interest in crypto-related stocks, but Dolev told investors to stick with “quality names" like Robinhood and Coinbase, which he thinks are better positioned.

At press time, Circle (CRCL) was trading at $153, down by 6.17% in the last 24 hours. Meanwhile, Coinbase (COIN) is trading at $324.65, up 0.63% in the same time.

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