CFRA analysts downgraded Coinbase Global (NASDAQ:COIN) from Hold to Sell. The analysts’ commentary follows a 14% decline in COIN shares since the SEC’s approval of spot Bitcoin ETFs and a 25% drop year-to-date, despite an impressive 400% recovery in 2023.

Looking forward, the analysts believe that the challenges to the company’s share recovery now surpass the substantial benefits it experienced in the second half of 2023, which were driven by overall market enthusiasm and a surge in bitcoin prices.

While higher bitcoin prices typically benefit COIN through increased transaction volumes and revenues, the introduction of spot ETFs might divert investors away from the COIN platform in search of crypto exposure, or potentially force COIN to lower its take-rates to stay competitive with new low-cost ETFs. Additionally, the analysts noted significant ongoing legal and regulatory challenges for COIN. The company is preparing for another legal encounter with the SEC to debate the classification of crypto assets as “securities.”

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