JPMorgan analysts have revised their rating for the cryptocurrency exchange Coinbase to “underweight,” attributing this change to the recent fall in Bitcoin’s price and the introduction of spot BTC exchange-traded funds (ETFs).
In a January 22 investor note, JPMorgan analysts expressed doubts about the future performance of Coinbase’s stock, trading under the ticker COIN. Data from Nasdaq revealed a significant 29% decline in COIN’s price over the past month, standing at $121.65 at the time of the report.
Despite recognizing Coinbase as a key player in the U.S. crypto exchange market and a global leader in crypto trading and investment, JPMorgan analysts foresee disappointment from the Bitcoin ETFs, which they believe could lead to lower cryptocurrency prices, reduced trading volumes, and diminished revenue opportunities for companies like Coinbase.
Previously categorized as “neutral,” COIN has now been downgraded by JPMorgan with a predicted price target of $80 by December 2024. The investment bank also noted that the listing of multiple spot Bitcoin ETFs, which was initially seen as a potential market catalyst, has not met industry expectations.
The U.S. Securities and Exchange Commission (SEC) approved several spot BTC ETFs on January 10. This decision followed a misleading tweet about the SEC’s approval, which caused significant market volatility. JPMorgan believes that the crypto industry’s high expectations for these ETF launches were unrealistic.
Since reaching over $49,000 on January 11, Bitcoin’s price has dropped by more than 20%, falling below $40,000 for the first time in 2024. Bloomberg ETF analyst James Seyffart reported a notable $76 million in net outflows from spot BTC ETFs, contrary to slowing down, signaling a declining market interest. The first three days of trading saw these funds amass a combined volume of $10 billion.
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