Analyst downgrades Coinbase stock rating due to uncertainty

Popular investment bank Piper Sandler rates Coinbase (COIN) NEUTRAL from Overweight, as it expects trading volume in the second quarter to be the lowest in the past two years.

While Coinbase stock has been surging after filings for the BlackRock exchange-traded fund (ETF), many analysts are worried about its future revenue.

Piper Sandler downgrades Coinbase stock

Piper Sandler lowered Coinbase has rated it from overweight to neutral and predicts a drop of more than 20% from the current market price. As of this writing, the stock is trading at roughly $77, while the investment bank’s latest price target is $60.

Patrick Muley, an analyst with Piper Sandler, argues that the uncertainty around Coinbase makes it difficult to predict future revenue. This is because the United States, one of Coinbase’s largest markets, has undergone a crackdown on cryptocurrencies this year.

Furthermore, the Securities and Exchange Commission (SEC) has filed a lawsuit against Coinbase, accusing it of operating as an unregistered broker.

Lowest trading volume in two years?

In 2023, the leading cryptocurrency Bitcoin is up more than 80%. At the same time, Coinbase stock is up more than 140%. Spot Bitcoin ETF deposits by large asset managers like BlackRock spurred the rally.

Learn more about Bitcoin here.

But Molly is worried about the turnover in the stock exchange. He explains:

“Rising cryptocurrency prices have not translated into increased trading volumes on Coinbase in recent quarters and the timing of the immediate approval of the Bitcoin ETF is anyone’s guess.”

However, Moley expects Coinbase’s trading volumes in the second quarter to be the lowest in the past two years. Last week, BeInCrypto reported that Berenberg Capital predicted a 50% drop in Coinbase stock to around $39 due to various factors, including regulatory uncertainty.

The counter is approaching a key resistance around $85. The chart below shows that COIN price movement was mostly sideways from $85 to $50 in 2023.

Coinbase Global, Inc. Chart in the daily timeframe. source: TradingView

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