Key Insights
- JPMorgan analysts downgraded Coinbase’s stock to “underweight” amid declining crypto prices.
- They predict share struggles as spot bitcoin ETF enthusiasm wanes after failing to meet “lofty expectations”.
- Coinbase seen as top US exchange but faces revenue impact from lower trading volumes if crypto slump continues.
MarketsXplora – JPMorgan analysts downgraded cryptocurrency exchange Coinbase (COIN) to an “underweight” stock rating on Monday, predicting share struggles amid declining bitcoin prices and as enthusiasm wanes for spot crypto ETFs.
In a note, JPMorgan said Coinbase shares risk disappointing investors after the long-awaited launch of U.S. bitcoin futures ETFs failed to meet “lofty expectations” across crypto markets.
The analysts had previously rated COIN a “neutral” with a $80 price target by end-2024. But with bitcoin having already dropped below $40,000 this year, they see “greater potential” for ETF mania to deflate further, sapping crypto trading volumes and Coinbase’s revenue streams.
Coinbase stock has sunk 29% over the past month, reaching $121.65 by Monday, based on Nasdaq data.
While still viewing Coinbase as the top U.S. exchange, JPMorgan said the early tepid inflows into spot bitcoin ETFs point to over-optimism around the structures many hoped would pump new institutional money into crypto.
We think much of the crypto-industry set a high bar for the ETF launches, and, while meaningful, we think expectations are simply too high and unrealistic, the analysts wrote.
On Jan. 10, the U.S. SEC approved several spot bitcoin ETFs, sparking short-lived rallies. But bitcoin has already retreated over 20% from 2023 highs, dipping under $40k on Monday.
With prices declining, analysts say Coinbase shares may similarly struggle if posts from a leading exchange fail to impress markets going forward.