JPMorgan analysts have downgraded the stock of cryptocurrency exchange Coinbase (COIN) to an "underweight" rating, attributing the decision to the recent decline in Bitcoin prices and the performance of listed spot Bitcoin exchange-traded fund (ETF) shares. COIN shares have underperformed, experiencing over a 29% drop in the past 30 days, reaching $121.65 at the time of reporting.
In a note to investors, JPMorgan expressed concern about the potential disappointment in the market regarding the catalyst for the Bitcoin ETF and its impact on the cryptocurrency ecosystem. The analysts noted that cryptocurrency prices, already under pressure, may face further challenges, leading to decreased trading volumes and diminished revenue opportunities for companies like Coinbase.
While acknowledging Coinbase's dominance in the U.S. crypto ecosystem, JPMorgan emphasized that the listing of multiple spot Bitcoin ETFs could be a crucial factor affecting the industry. The investment bank had previously rated COIN as "neutral" but adjusted its projection to a price target of $80 by December 2024.
The recent approval of spot BTC ETFs by the U.S. Securities and Exchange Commission (SEC) on January 10 has stirred uncertainty, contributing to market fluctuations. JPMorgan highlighted that expectations within the crypto industry for the ETF launch were unrealistically high, leading to potential disappointment as companies set a high bar for their introduction.
Bitcoin prices have experienced a significant drop, falling over 20% since briefly reaching a 30-day high of over $49,000 on January 11. Bloomberg ETF analyst James Seyffart reported that spot BTC ETFs faced net outflows of approximately $76 million on their seventh day of trading, with outflows accelerating rather than slowing down.
