Coinbase is the best-performing stock in the S&P 500 in June, and may have even more room to run

The surge this month comes as investor attention shifts away from Coinbase's core, trading, to stablecoins and other ways crypto can vide utility

Even with a 43% gain in June, s have further to run if the market remains bullish on Circle Internet Group, according to Citizens

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CM= your favorite stocksCREATE FREE ACCOUNTPeople watch as the logo for Coinbase, the biggest U

On Thursday, the stock hit its highest level since the day of its initial public offering in 2021. "The S&P 500 inclusion, the Senate's passage of the GENIUS Act and very strong performance of Circle negated the false narratives for Coinbase and people are waking up," Oppenheimer analyst Owen Lau told CNBC

Restraints lifted"The two things holding Coinbase back were the issues of fee compression — it hasn't happened and in fact, Coinbase has been generating positive earnings consistently, which is why they were included in the S&P 500 — and regulatory uncertainty," he said. "Many people don't believe there will be any consensus coming out of Congress … the fact is we're seeing the passage of the GENIUS Act. "The GENIUS Act establishes the first federal framework for dollar-pegged stablecoins, granting sweeping authority to the Department of Treasury and opening the door to banks, fins, and retailers

Even with Coinbase's 44% run this month, the stock has room to appreciate further, according to Devin Ryan, head of financial nology re at Citizens

He said the market isn't fully connecting the dots around Coinbase's close relationship with Circle Internet Group

According to a revenue agreement, Coinbase keeps 100% of the revenue generated on all USDC held on Coinbase, plus nearly 50% of all other USDC revenues, "which is 99% of Circle's current revenue," Ryan said

USDC is the stablecoin issued by Circle

Another way to play"Yet, Coinbase doesn't incur any of the operating costs borne by Circle," Ryan said. "If the market is right on the current bullish view for Circle, Coinbase is another way to play that — and with the financial connection described, it would seem there's a lot more value left in Coinbase. "Coinbase, whose core is crypto trading, has been expanding its suite of crypto services over the past several quarters to include areas custody, staking, wallet services and stablecoins

This month, the company beefed up its subscription plan by offering it with its first crypto-backed credit card in partnership with American Express

It also introduced a partnership with Shopify and debuted a stablecoin payments service for e-commerce

JPMorgan also partnered with the crypto company to launch its own version of a stablecoin, which it's calling a "deposit token" on Coinbase's in-house built blockchain, Base. "There's ly a sentiment trade occurring in crypto as institutional investors are looking at the space, many for the first time, and want to express a positive view on crypto evolving from a speculative asset class to one of utility — with legislative clarity as the key catalyst — and Coinbase is the most direct way to invest in that thesis," Ryan said

Volume concernIf there's one concern, it's in trading volume, said Oppenheimer's Lau

The average daily volume of crypto transactions on the Coinbase platform has been lower since April, which could be a risk for the company and other crypto trading viders heading into the second half of the year

The analyst is optimistic the regulatory outlook can turn that around though, specifically if the industry gets market structure legislation on top of stablecoin legislation. "If the GENIUS Act brought us to 'stablecoin summer' then I believe that the eventual passage of the CLARITY Act can bring us into altcoin summer," Lau said. "So at the end of this year, I do see another catalyst that can reverse this trend because there will be animal spirits, people will be buying altcoins crazy if we get past the market structure bill. "Don't miss these cryptocurrency insights from CNBC : How the MicroStrategy bubble could pop, hurting your portfolioWhat Amazon and Walmart's reported stablecoin exploration means for payments stocksBitcoin is primed for a surge to fresh all-time highs above $130,000, according to the chartsBitcoin held above $100,000 for 30 consecutive days — even with a 10% pullback — for the first time everwatch nowwatch now12:41Sen

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