Waning Bitcoin ETF Hype A Drag On Coinbase
JPMorgan Chase & Co. has downgraded Coinbase Global Inc. to underweight from neutral, citing a slump in Bitcoin and waning interest in exchange-traded funds that invest directly in the digital token. Coinbase’s shares dropped as much as 5.4% in US premarket trading on Tuesday, marking JPMorgan’s first sell-equivalent rating on the stock since May 2021.
Coinbase shares ended 2023 with a gain of nearly 400%, tracking Bitcoin’s surge into the end of the year. However, the US financial regulator’s recent approval for spot Bitcoin ETFs has left market watchers wondering if crypto-related stocks will continue their stellar gains.
Coinbase shares are down 26% this year, while Bitcoin has declined 7.1% and was last trading below $40,000. JPMorgan’s Worthington sees greater potential for cryptocurrency ETF enthusiasm to further deflate, driving lower token prices, lower trading volume, and lower ancillary revenue opportunities for firms like Coinbase. The analyst maintains a price target of $80 on the stock, predicting a 38% drop in shares over the next 12 months.
(With inputs from Shikha Singh)
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