Crypto exchange Coinbase (COIN) is soaring 16% early Tuesday after the Monday evening announcement of its inclusion into the S&P 500.

COIN will be added to the S&P 500 index after the close on Friday, replacing Discover Financial Services (DFS) which is being acquired by Capital One (COF).

Wall Street brokerage Bernstein estimates the move could lead to roughly $16 billion of buying pressure for Coinbase — around $9 billion from passive funds linked to the S&P 500 and $7 billion from active allocations.

Coinbase is the "first and only crypto company to join the S&P 500," analysts led by Gautam Chhugani wrote.

Chhugani has an outperform rating on Coinbase shares with a $310 price target, or about another 30% upside from the current $240.

Investment bank KBW estimates that S&P 500 passive funds will need to buy 36 million Coinbase shares for index inclusion, which is about 4 days of average buying volume.

KBW further noted that as of April 30, 9.9 million Coinbase shares were held short, which is 1.4 days to cover.

"Since 2017, financial 500 adds have outperformed by 5.2% on the day after announcement," KBW said, and Coinbase's addition could pave the way for other crypto firms to join the index.

Read more: Coinbase Shares Jump 8% on S&P 500 Inclusion

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