Coinbase's stock price could experience volatility in the short term due to the ongoing legal battle with U.S. securities regulators and an anticipated decline in Bitcoin prices, according to analysts from investment bank Oppenheimer. Owen Lau, an analyst at Oppenheimer, highlighted the existing legal uncertainties surrounding Coinbase's lawsuit with the U.S. Securities and Exchange Commission (SEC), which alleges violations of securities laws. Lau emphasized that the lack of clear regulations in the U.S. could lead to some price movement for Coinbase's stock, which is currently priced at $125.
Despite the regulatory uncertainties, Bloomberg litigation analyst Elliot Stein expressed optimism, predicting a 70% chance that Coinbase will see a favorable outcome in its legal proceedings against U.S. regulators. He anticipates the dismissal of the lawsuit, offering a positive outlook for the cryptocurrency exchange. Lau acknowledged that the recent 28% decline in Coinbase's stock over the last 30 days might prompt short-term price movements. However, he noted that the overall gains for the past three months amounted to approximately 67%.
The analyst attributed the overall rise in Coinbase's stock to the surge in Bitcoin prices in late 2023, driven by growing optimism following the SEC's approval of a spot Bitcoin ETF on January 10. However, Lau pointed out that Bitcoin prices have experienced a decline of around 10.37% in the past two weeks following the approval of the spot Bitcoin exchange-traded fund by the SEC. The current price of Bitcoin stands at $41,863, and Lau expects short-term price fluctuations for the cryptocurrency.
In a related development, JPMorgan Chase recently downgraded Coinbase stock to an "underweight rating" on January 23. The downgrade was attributed to the decrease in Bitcoin prices and the listing of spot Bitcoin ETF shares. Lau concurred with the expectation of short-term downside momentum for Bitcoin, anticipating fluctuations until the next catalyst emerges in the market.
