JPMorgan Lowers Rating on Coinbase Citing Concerns about Potential Impact of Spot Bitcoin ETF
JPMorgan Chase & Co. has downgraded Coinbase Global Inc. and expressed concerns about the resilience of the U.S. market in accepting newly approved spot Bitcoin exchange-traded funds (ETFs).
In a dissenting view, JPMorgan, which previously had a “neutral” rating on Coinbase, has now downgraded the company to “underweight” and anticipates challenges in 2024, despite its significant profits in the previous year. The bank maintains a price target of $80 on Coinbase stock, predicting a 38% drop over the next 12 months. This downgrade marks a significant shift from the bank’s previous coverage initiated in May 2021. Following this news, Coinbase shares fell 4.1% to $122.90 in pre-market trading.
Lead analyst Kenneth Worthington from JPMorgan emphasized concerns about the potential deflation of enthusiasm surrounding cryptocurrency ETFs. He explains, “While we still see Coinbase as the leading U.S. exchange in the crypto ecosystem and a global leader in cryptocurrency trading and investing, we believe that the catalyst of Bitcoin ETFs that drove the ecosystem out of its winter will disappoint market participants.”
Initially, the approval of Bitcoin ETFs by the SEC was expected to attract mainstream investment. However, JPMorgan fears that any disappointment in ETF fund flows could lead to a decline in market sentiment. The bank’s report notes that this scenario could result in lower token prices, lower trading volume, and reduced ancillary revenue opportunities for platforms like Coinbase.
Despite JPMorgan’s bearish sentiment, investment firm Wedbush takes a more optimistic view. Their report from January 11 suggests that Coinbase is likely to benefit from the SEC’s approval of spot Bitcoin ETFs.
JPMorgan’s downgrade of Coinbase reflects concerns about the potential impact of spot Bitcoin ETFs on the finance market in the future. While some analysts caution, others believe that Coinbase could benefit from the ongoing bull run.
Tags: Coinbase Exchange