JPMorgan Analysts Downgrade Coinbase Shares, Causing Pre-Market Drop
JPMorgan analysts have downgraded Coinbase shares from Neutral to Underweight, resulting in a 5% decline in the stock’s value during premarket trading on Tuesday. They have set a price target of $80 per share, indicating a significant downside risk of over 37% from the current share price. The downgrade is based on concerns about Coinbase’s prospects in 2024 and skepticism regarding the potential impact of recently approved Bitcoin exchange-traded funds (ETFs).
Concerns About Bitcoin ETFs and Cryptocurrency Enthusiasm
The decision to downgrade Coinbase comes as market participants evaluate the effects of newly launched Bitcoin ETFs on the cryptocurrency ecosystem. JPMorgan analysts worry that the anticipated catalyst provided by these ETFs may disappoint market participants, potentially deflating enthusiasm for cryptocurrencies even further. This waning enthusiasm is expected to have a negative impact on token prices, trading volume, and ancillary revenue opportunities for companies like Coinbase.
Coinbase Expands Global Presence Amid Regulatory Hurdles
Coinbase has been actively expanding its global presence despite regulatory challenges. The exchange obtained an Anti-Money Laundering (AML) compliance registration from the Bank of Spain, making it a registered crypto exchange in the country. This allows Coinbase to offer its products and services to users in Spain while ensuring compliance with the country’s legal framework.
In addition to Spain, Coinbase has obtained Virtual Asset Service Provider (VASP) registrations in several European countries and has launched its services in Singapore, Brazil, and Canada. These efforts reflect Coinbase’s push for international expansion amidst growing regulatory hostility in the US.
Hot Take: JPMorgan Downgrade Raises Concerns About Coinbase’s Future Performance
The downgrade of Coinbase shares by JPMorgan analysts raises concerns about the company’s future performance. Despite Coinbase’s progress in various initiatives, such as derivatives development and the Layer-2 Base, analysts predict a more challenging year for the cryptocurrency exchange in 2024. With a price target of $80 per share based on normalized earnings power, JPMorgan analysts suggest a downside of 35% for the shares.
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