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The coin base (stocks/coin”>CURRENCY) price fell 4.1% to $122.90 during pre-market trading after JPMorgan downgraded the cryptocurrency exchange to underweight in a research report on Monday, citing likely disappointment among investors following the launch of spot bitcoin ETFs (exchange-traded funds) in the US.
“While we continue to view Coinbase as the dominant US exchange in the crypto ecosystem and a leader in global cryptocurrency trading and investing, we believe the catalyst in bitcoin ETFs that pushed “The ecosystem's exit from its winter will disappoint market participants,” wrote analysts led by Kenneth Worthington.
Coinbase Stock Is at the Mercy of Waning bitcoin Spot ETF Interest
Many investors anticipated that the approval of bitcoin spot ETFs by the US Securities and Exchange Commission (SEC) would usher the crypto space into a new bullish era. Through these instruments, institutional funds can flow into the digital asset space, allowing investors who were previously prohibited from owning digital assets to gain exposure to the leading cryptocurrency without having to own the underlying asset themselves.
JP Morgan downgraded Coinbase to underweight and said it was a fair valuation for $ CURRENCY is $80 per share. That would mean a drop of more than 35% from its current level. pic.twitter.com/eIqAW3XIme
– Bar Chart (@Barchart) January 23, 2024
Although the introduction of conventional financing could lead to a significant rise in cryptocurrency prices, JPMorgan warned that “any disappointment with ETF fund flows could deflate the enthusiasm that has fueled the cryptocurrency rally.” The Wall Street giant also noted that the price of bitcoin is currently under pressure, having already fallen below $40,000.
He added that there is a chance that “enthusiasm for cryptocurrency ETFs will deflate further.” If this were to happen, the bank predicts it will lower token prices and lead to reduced trading volumes, which in turn will “reduce ancillary income opportunities” for companies like Coinbase.
As a result, the bank believes that 2024 could be a challenging year for the crypto exchange despite its progress on a number of important initiatives, and maintained a price target for COIN at $80 over 12 months that anticipates a 35% drop. COIN is already down approximately 21% so far this year.
The report also said that Coinbase It is expected to perform custodian, surveillance and trading roles for Ether spot ETFs if approved in the US.
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