Crypto exchange Coinbase (COIN) is positioned to benefit from the Ethereum Merge as institutional and retail clients get value from staking ether (ETH), JPMorgan analyst Kenneth Worthington told clients in a note.

JPMorgan estimates that Coinbase has a 15% market share in ETH assets, which trumps its 7% share of the overall crypto ecosystem. Worthington says Coinbase's market share is probably tilted toward institutions, which are more likely to own ETH and bitcoin (BTC), whereas retail customers may "traffic more in the more speculative tokens."

The bank further estimates that Coinbase can generate an incremental annual staking revenue of $650 million from the Merge, with ETH at $2,000 and a 5% yield. The exchange began offering Ethereum staking for institutional clients earlier this month.

"Coinbase is bigger in [ether] than was intuitive to us, thus leading directly to a bigger revenue opportunity," the bank wrote. JPMorgan has a neutral rating and $64 price target on Coinbase shares, which closed Tuesday at $90.39.

Read more: Crypto Derivatives Traders Bet on Ether Staking Yields Doubling to 8% Post-Merge