JPMorgan Downgrades Coinbase Shares to ‘Underweight’ Following Bitcoin ETF Approvals
Analysts at JPMorgan downgraded cryptocurrency exchange Coinbase's stock to an “underweight” rating, citing falling Bitcoin (BTC) prices and listing BTC exchange-traded funds.
In a Jan. 22 note to investors, JPMorgan analysts noted that Coinbase's stock price under the ticker COIN is underperforming. According to data from Nasdaq, the price of COIN has decreased by more than 29% in the last 30 days, reaching $121.65 at the time of publication.
“While we continue to see Coinbase as a major US exchange and cryptocurrency business in the cryptoecosystem and a leader in global investment, we think it will be disappointing for the market participants to be aggressive in Bitcoin ETFs that have pushed the ecosystem out of the winter,” JPMorgan said. “Cryptocurrency prices are already under pressure; with Bitcoin falling below $40K as of this writing, we see more liquidity for crypto ETF enthusiasm, driving account prices, lower transaction volume and lower ancillary revenue opportunities for firms like Coinbase.”
The investment bank previously rated COIN as “neutral” but predicted a December 2024 price target of $80. According to JPMorgan, multiple listings of Bitcoin ETFs could be a “key boost” to the crypto industry, overvaluing and potentially damaging. Stock prices.
“[W]Find out where Bitcoin ETFs have flown to date given the high valuation that many in the crypto industry have confirmed leading up to its approval.
The United States Securities and Exchange Commission (SEC) officially approved the listing of multiple BTC ETFs on January 10, a day after hackers sent out a fake tweet announcing that the commission had given the green light to the investment vehicles. The uncertainty has caused sudden volatility in the crypto markets.
“We think much of the crypto-industry has set the stage for an ETF launch, and while it makes sense, we think the expectations are simply too high and unrealistic,” JPMorgan said.
Related: JPMorgan CEO digs into Bitcoin and Satoshi blasts BTC hodl rumors on Reddit
After briefly touching a 30-day high above $49,000 on January 11, bitcoin prices have fallen more than 20% to $38,796 at press time. 2024 marks the first time the crypto asset price has fallen below $40,000.
Bloomberg ETF analyst James Seifert reported on Jan. 23 that BTC ETFs saw net outflows of nearly $76 million in the seventh day of trading, and flows are “picking up” rather than slowing down. Ten of the funds approved by the SEC reported trading volume of $10 billion in the first three days.
Related: Coinbase Fights SEC in Court, SBF Parents Seek Dismissal and Bitcoin ETFs: Hodler's Digest, January 14-20
