“While Coinbase is expected to be the custodian and prime broker for BlackRock’s ETF, and has more recently been named as the surveillance-sharing exchange partner with Cboe’s BZX Exchange for five ETF applications…it is not immediately clear to us that a successful ETF launch should translate into a P&L benefit for Coinbase,” he wrote, referring to the company’s profit-and-loss statement. See more: Coinbase stock explodes higher as enthusiasm builds for spot bitcoin ETFs Barclays analysts recently spoke with an industry expert who suggested the case could drag on for at least two years.Ĭoinbase shares have also been riding a wave of recent excitement around applications for spot bitcoin exchange-traded funds that have been filed by several asset managers, but Budish wonders if the company will really benefit. “While our downgrade is not predicated on an assumption that the current SEC lawsuit will result in any particular damage to the company, we nevertheless think the overhang will weigh on the stock for some time,” Budish wrote. “Trading levels remain depressed, and there is likely little incremental upside to yields beyond Q2,” he wrote.Īdditionally, Budish was worried about the ongoing risk of regulatory setbacks for Coinbase, which faces a lawsuit from the Securities and Exchange Commission charging the company with operating an unregistered national securities exchange. Meanwhile, the second quarter on the whole looked weaker than the first quarter to him, and July trends could be shaping up worse than June ones, he added. He wrote that despite a “a significant recent run-up in shares,” there are “few near-term drivers, particularly from a fundamental perspective,” in his view.ĭon’t miss: Coinbase’s stock has been on a surge, but analyst says the pop ‘may prove short-lived’īudish acknowledged that June exchange volumes appeared to show some improvement relative to May, but that still only amounts to “abating” declines.
“While we continue to believe Coinbase is a likely longer-term winner in the broader crypto ecosystem, fundamentals remain challenged, and recent relief from price actions, increasing rates, and cost rationalization likely have little further to run,” he continued.
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