The cryptocurrency market is experiencing a bit of a resurgence at the start of 2023, a welcome development given how unfavorable last year was for the entire industry. Macro headwinds, investors seeking safer assets, and failures and bankruptcies deserve the credit for the massive loss of value in 2022. 

But this hasn't stopped market observers from remaining optimistic, especially BTIG analyst Mark Palmer. According to him, Coinbase (COIN 4.55%), a top crypto stock, has 100% upside. Let's take a closer look at why he's so bullish on this cryptocurrency brokerage and exchange operator. 

Coinbase as a trusted entity 

As of Jan. 20, Coinbase's stock was at $55, meaning a 100% rise translates to a $110 price target. Usually, Wall Street analysts try to predict where shares will be 12 months out. If Coinbase hits this target by year's end, that would certainly boost investor portfolios. 

The reasoning behind his forecast is pretty simple. Palmer views Coinbase as a "safe haven" for those looking to invest in digital assets. Certainly, this makes sense when you think of what happened last year. The event that's probably most pertinent in readers' minds is the complete blowup of FTX, which at the time was the fourth largest crypto exchange in the world. 

It was discovered that FTX was using client assets that were deposited in brokerage accounts to lend money to its sister organization and hedge fund, Alameda Research. This was a huge red flag, and it shined light on the complexity and opaqueness that still exists in the industry. FTX has since declared bankruptcy, and its once billionaire founder, Sam Bankman-Fried, has run into trouble with the law. 

Consequently, Palmer believes Coinbase will gain market share during the current crypto market downturn. Since its founding in 2012, Coinbase has emphasized safety and security above all else. This goes a long way in it being one of the most trusted platforms in the space. 

Palmer also points to how Coinbase, as a U.S.-listed public company, must have its financials audited. This leaves little room to hide any shenanigans that might come at the expense of customers or investors. And it provides peace of mind to all stakeholders. 

Take it with a grain of salt 

At a high level, Palmer's assessment makes complete sense. As more users enter the crypto economy, wanting to buy and sell Bitcoin, Ethereum, or a huge number of other tokens, Coinbase stands to benefit by hopefully attracting more of these new customers than existing rivals thanks to its standing as a safe haven. 

And this will lead to the potential for greater revenue. That's something the business desperately needs, as sales through the first nine months of 2022 dropped 52% year over year, with Coinbase posting a net loss of $545 million in the most recent quarter, ended Sept. 30. 

However, I urge readers to take any analyst's price target with a massive grain of salt. I'm always weary of anyone who thinks they know where a stock will go in the next 12 months, which is such a short time period. Literally anything can happen, and there are simply too many unknowable variables at play that can affect not only a company's underlying fundamental performance, but its stock price as well. 

This dynamic is even more pronounced when dealing with the cryptocurrency market. Yes, I agree with Palmer's general analysis. Coinbase could attract more users onto its platform in the future, and thus gain market share, thanks to the string of high-profile blow-ups in the industry that highlight how its business is better from a fiduciary perspective.  

But for Coinbase shares to hit $110, the entire crypto market will most likely need to see its value soar quickly. And if we know anything from studying the recent past, it's that no one knows where crypto asset prices are going, especially not in the near term. 

Interested investors should monitor Coinbase's progress, particularly as it relates to user growth, starting with the company's Q4 2022 earnings announcement next month.