JPMorgan’s Concerns and Downgrade
Global investment bank JPMorgan has downgraded Coinbase stock from Neutral to Underweight, expressing concerns about the crypto market. Despite acknowledging Coinbase’s dominance as a leading U.S. exchange and its progress in various initiatives, JPMorgan analyst Kenneth Worthington believes that the recent approval of bitcoin exchange-traded funds (ETFs) by the SEC will disappoint market participants.
Worthington predicts a 35% downside in Coinbase shares, valuing the stock at $80/share. He points out that cryptocurrency prices are already under pressure and warns of the potential for further deflation caused by cryptocurrency ETF enthusiasm. This could lead to lower token prices, decreased trading volume, and reduced ancillary revenue for firms like Coinbase.
JPMorgan’s Prediction of Bitcoin Selloff
Last week, another JPMorgan analyst predicted an upcoming bitcoin selloff, with Grayscale expected to experience a $3 billion outflow. Grayscale converted its bitcoin trust into a spot ETF following the SEC’s approval. However, the conversion has resulted in significant outflows for Grayscale. On the other hand, newly launched spot bitcoin ETFs like Blackrock’s Ishares Bitcoin Trust have seen strong inflows.
Hot Take: Challenging Times Ahead for the Crypto Market
JPMorgan’s downgrading of Coinbase and its warning about the potential deflation in the crypto market indicate that challenging times lie ahead. With the approval of bitcoin ETFs, expectations were high, but the initial net inflow into these funds has been lower than anticipated. JPMorgan’s concerns about lower crypto prices, trading volume, and revenue opportunities suggest that the market may face difficulties in the near future. Investors and traders should be cautious and monitor the developments closely before making any decisions.
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