BitGo: Institutional Crypto Infrastructure At A Discount

Summary BitGo Holdings is rated a Buy with a 12-month price target of $15, reflecting misunderstood post-IPO weakness rather than deteriorating fundamentals. BTGO's core business is accelerating: clients grew 42% YoY, normalized assets rose 29%, and stablecoin-as-a-service revenue surged 44% sequentially with expanding take rates. Stablecoin infrastructure and the OCC national bank charter position BTGO as a critical institutional control layer for digital assets, creating a durable competitive moat. Valuation appears attractive at 1.5–1.9x recurring platform revenue, with risk cushioned by recurring revenue streams and strong institutional adoption trends. Investment Thesis BitGo Holdings ( BTGO ) may appear messy at first glance, however, a deeper look unveils a company with sound operations. Shares have fallen significantly from all-time highs of $24.50 down to ~$9, a 63% drop. Q1 topline results also indicated a widening net loss and sequentially lower revenues, which may help explain the current share price. In my view, this selloff has been extreme. The headline figures ultimately hide two positive trends: a rapidly growing stablecoin business and a developing institutional custody platform. Although the company is currently burning cash and faces crypto volatility, investors appear to be pricing in potential failure of the underlying business model. I see this as unlikely with positive underlying characteristics, which is why I am rating BitGo a buy with a 12-month target price of $13.31. BitGo's business After its IPO in January 2026, BitGo stock saw a 25% increase shortly after, but this turned out to be temporary, with the stock falling sharply in the following months. The company provides digital asset custody services to over 5,500 institutional clients, including exchanges, asset management firms, hedge fund groups, and corporate entities that are located in over 100 different countries. This includes custody coverage for 186 of the top 250 digital assets globally by market cap. Although BitGo's primary service remains regulated cold storage custody, the firm has also expanded into staking, trading, financing, and Stablecoin-as-a-Service. At the end of Q1, Assets on Platform (AoP) were valued at $63 billion, representing a decline of 30% YoY from a value of $90.5 billion, something that can largely be attributed to crypto price fluctuations. On a price-normalized basis, which adjusts prior-period balances using current-quarter average digital asset prices, Assets on Platform increased ~29% YoY. As far as client growth goes, there were 42% more institutional clients using BitGo’s platform compared to one year ago. This shows operational improvement YoY, even with a digital asset downturn, making today's levels appear discounted. Author The Hidden Growth Engine: Stablecoin-as-a-Service Stablecoins are starting to gain traction among institutions, largely due to recent regulatory advancements in the US. This puts BitGo in a strong position as the institutional-grade infrastructure for the creation and redemption of stablecoins. The company has also made recent launches such as the BitGo Mint platform, which supports custody and redemption for USD1 and SoFiUSD through its Stablecoin-as-a-Service segment. These are recurring revenue streams that generate income based on the volume of stablecoin transactions rather than the value or price of Bitcoin. This reduces overall dependence on digital asset values and also provides BitGo with a strong source of growth. This is evidenced by Q1 results , where stablecoin-related revenues were $38.2 million, up 43.6% QoQ. Author The company also reported that its take rate increased to 7.4%, showing pricing power improvements. This recurring fee-based revenue is also backed up by Subscription and services, which had revenue of $25.6 million, up 11.3% YoY. Although BitGo does suffer from a weak crypto market, it still has stable inflows from high-growth segments, which is something the market seems to be overlooking. Custody Is Infrastructure Now BitGo was already viewed as one of the leading players in U.S. crypto custody before going public, which seems to be a bigger deal than many investors may think. The importance of that position has grown as crypto custody has evolved from a service for speculators into an institutional requirement. Institutions can’t access a Bitcoin ETF without a qualified custodian, create tokenized assets unless they are stored in cold storage, or stake crypto without regulated infrastructure. BitGo sits at the intersection of all three, giving the company a fundamental position in digital asset infrastructure rather than just benefiting from rising asset prices. Coinbase ( COIN ) built a $50+ billion company based on this same premise, with exchanges first, then building out custody and institutional offerings over time. BitGo does not have the same size or the same scale of exchange revenue, but it does have a focused custody business catering to some of the largest institutions in the digital asset space. With the current market cap of ~$1 billion, it appears the market is underestimating that value. Q1 Numbers Total revenue was $3.77 billion, down 38.7% QoQ, but most of this decrease is simply due to how BitGo reports its derivatives trading as opposed to spot trading. Derivatives were launched early in the quarter, and this caused a shift in accounting due to the net basis they are reported on versus the gross basis used for spot trading. The net loss of $60.7 million looks more damaging than it actually is. Included within the net loss is $53.7 million worth of non-cash expenses on the company's Bitcoin treasury, plus IPO-related expenses and elevated stock-based compensation. A better operational metric to judge BitGo on, adjusted EBITDA, was only slightly negative, which isn't great but should improve as the broader crypto environment normalizes. Overall, the operational picture appears to be very different from a structurally declining company, with client growth increasing 42% YoY, compounding stablecoin revenue, and increasing take rates. Author Valuation At ~$9, BitGo is priced at ~3.9x annualized fee revenue (Stablecoin-as-a-Service + Subscriptions and Services), which looks relatively low given the stablecoin industry's growth rates. The overall revenue includes digital asset sales as well, but this is very low margin, making the annualized fee revenue the main valuation metric. The annualized fee revenue metric doesn't account for expected sequential growth, which BitGo expects sequentially for both segments. Due to this and the momentum in the overall digital asset industry, I believe current levels fail to reflect the full growth potential of BitGo as more institutions look to enter the ecosystem. Applying a 6x annualized fee revenue multiple results in an equity value of $1.5 billion, implying a price per share of ~$13.31 when dividing by shares outstanding of ~115 million. This represents my 12-month price target as investors begin to see normalized operations and the underlying strength in the fee-related growth drivers. Risks The biggest risk is exposure to the cryptocurrency markets. If investors lose confidence in cryptocurrencies and a selloff occurs, AoP will fall, staking rewards will decline, and investor sentiment may worsen. This could cause further declines in stock price, with much of the company's value tied to the digital asset environment. Another risk is execution with segments such as its Stablecoin-as-a-Service segment, which has potential but is also an emerging industry. If there is a slowdown in stablecoin usage, due to either competitive challenges or new regulations, it could hurt BitGo's growth story. Conclusion BitGo is still a pre-profitability company with potential for volatility related to crypto; however, at current levels, this risk appears overly priced in. Although the stock is pricing in substantial risk, the company remains a solidly positioned institutional custody platform with a rapidly expanding stablecoin infrastructure business and strong client growth. With shares now appearing de-risked, I believe the stock represents a buying opportunity for long-term investors who believe in the outlook of digital assets, beyond just crypto. In my view, the stablecoin portion of the business is likely to compound, and IPO-related expenses should fade, making way for the stock to reach $13.31 within the next 12 months, which is why I'm rating the stock a Buy.