A recent investment report from Berenberg Capital Markets has suggested that Hamas militants utilized cryptocurrencies to finance their recent attacks on Israel. According to the report by Berenberg's chief analyst, Mark Palmer, this development could potentially hinder Coinbase's lobbying efforts in the United States regarding cryptocurrency regulation.
Mark Palmer's research report, published on October 18, indicated that one of the primary reasons for his cautious stance on Coinbase is the regulatory actions taken by the United States, coupled with the political resistance related to the Israel-Hamas conflict. Israeli authorities were reported to have closed and confiscated over 100 accounts on various cryptocurrency exchanges, including Binance, which were allegedly used to raise funds for Hamas. During this crackdown, Israeli authorities seized millions of dollars in cryptocurrency assets.
Although Hamas had announced in April that it would cease using cryptocurrencies for fundraising due to authorities' ability to track their movements on blockchain ledgers, recent developments may raise concerns about the legal status of cryptocurrencies. In recent years, Coinbase has significantly intensified its lobbying efforts in the United States as part of its strategy to promote clearer and more crypto-friendly regulations in the country.
Berenberg analysts have maintained a "hold" recommendation on Coinbase (COIN) stock, with a $39 price target. Coinbase's shares were trading at $77.30, up 3% at the time of the report. The cautious outlook on COIN is influenced by its substantial increase of over 112% this year, compared to Bitcoin's gain of about 72% and the Nasdaq's increase of approximately 29%.
Additionally, the ongoing lawsuit between Coinbase and the U.S. Securities and Exchange Commission is seen as a potential overhang that could affect the positive momentum of the company's stock price. Mark Palmer also mentioned the "ongoing crypto winter," which has led to lower-than-expected trading volumes, while noting that Berenberg has revised its forecast for Coinbase's consumer trading revenue to $240.8 million, up from the previous estimate of $210 million. Despite the challenges, Palmer highlighted that Coinbase's strong cash balance provides flexibility and that the company is likely to continue reducing expenses and advancing its strategic path forward.
