- JPMorgan analysts have downgraded Coinbase stock to an underweight rating as the price of Bitcoin has fallen below $40,000 and spot Bitcoin ETFs have launched.
- The analysts believe the listing of multiple spot Bitcoin ETFs has led to overestimated value and will likely affect stock prices negatively.
- With crypto prices falling and Bitcoin below $40,000, the analysts see potential for ETF enthusiasm to decline further, driving lower token prices, trading volumes, and revenue for Coinbase.
JPMorgan analysts have downgraded Coinbase stock to an underweight rating. This comes as the price of Bitcoin has fallen below $40,000 and after the launch of spot Bitcoin exchange-traded funds (ETFs).
Reasons for the Downgrade
The investment bank had previously rated Coinbase stock as neutral but maintained its price target of $180 by December 2024. However, JPMorgan now believes the listing of multiple spot Bitcoin ETFs has led to overestimated value and will likely affect stock prices.
According to the analysts, flows into the new spot Bitcoin ETFs have been underwhelming compared to expectations. They believe the crypto industry had unrealistically high hopes for the ETFs, which are now disappointing investors.
With crypto prices already under pressure and Bitcoin falling below $40,000, the bank sees potential for ETF enthusiasm to further decline. This could drive lower token prices, trading volumes, and revenue opportunities for Coinbase.
The Impact on the Crypto Market
Since briefly topping $49,000 on January 11, the price of Bitcoin has fallen over 20% to below $40,000. This marks the first time in 2023 that Bitcoin has dropped under $40,000.
Data shows the new spot Bitcoin ETFs have seen net outflows rather than increasing flows. JPMorgan believes the uncertainty caused by the fake ETF approval tweet in early January has contributed to crypto market volatility.
Overall, the analysts argue expectations were too high for the impact of spot Bitcoin ETFs. With prices now falling, they expect this will reduce income opportunities for crypto exchanges like Coinbase.