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JPMorgan Downgrades Coinbase Amid Concerns Over Spot Bitcoin ETF Impact

JPMorgan Chase & Co. has downgraded Coinbase Global Inc., raising concerns about the U.S. market’s resilience in accepting the newly approved spot Bitcoin exchange-traded funds. 

Dissenting Words 

The success of spot Bitcoin ETFs also has the potential to reverse and disappoint investors. This cautious view comes from JPMorgan, the bank that downgraded Coinbase from ‘neutral’ to ‘underweight’, and has anticipated challenges in 2024 despite the firm’s significant profits in the previous year. 

The bank maintains a price target of $80 on Coinbase stock, anticipating a 38% drop over the next 12 months. The downgrade significantly shifts from the bank’s previous coverage initiated in May 2021. Following this news, Coinbase shares fell 4.1% to $122.90 in pre-market trading.

Analyst Reports

Lead analyst Kenneth Worthington emphasized concerns about the potential deflation of enthusiasm surrounding cryptocurrency ETFs.

He writes, “While we continue to see Coinbase as the dominant U.S. exchange in the crypto ecosystem and a leader in cryptocurrency trading and investing globally, we think the catalyst in bitcoin ETFs that pushed the ecosystem out of its winter will disappoint market participants.” 

The SEC’s approval was initially expected to attract mainstream investment, but the bank fears that any disappointment in ETF fund flows could lead to a decline in market sentiment. The Monday report notes that “lower token prices, lower trading volume, and lower ancillary revenue” opportunities for platforms like Coinbase could result from this scenario.

Despite JPMorgan’s bearish sentiment, investment firm Wedbush takes a more optimistic view. Wedbush’s recent report from January 11 suggests that Coinbase is most likely to benefit from the SEC’s approval of spot Bitcoin ETFs. 

JPMorgan’s downgrade of Coinbase reflects concerns over the potential impact of spot Bitcoin ETFs on the finance market in the future. While some analysts caution, others believe Coinbase could benefit from the evolving bull run.

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