Coinbase (NASDAQ:COIN) shares have surged by an impressive 124% year-to-date, but Mizuho analysts believe that this rapid rise is not sustainable.
Bitcoin prices have also experienced a 56% increase year-to-date, driven by a more favorable environment for risky assets. However, the analysts suggest that this situation may not last.
Mizuho Securities pointed out that, historically, rising Bitcoin prices have led to increased retail engagement in cryptocurrency trading. However, they now observe a decline in retail crypto FOMO (Fear of Missing Out), which they believe could result in an unprecedented disconnect between Bitcoin prices and Coinbase trading volumes. Retail trading accounts for a significant 95% of Coinbase’s trading revenue.
The analysts anticipate a substantial drop in Coinbase’s stock value in the coming months, citing the waning enthusiasm seen after the spike in daily trading volumes following news related to the SEC and Grayscale. As evidence, the analysts highlighted that average daily volumes in September are tracking at a level approximately 25% below those in August.