JPMorgan Analyst Downgrades Coinbase, Citing Bitcoin Price Decline

Last year, the value of Coinbase Global Inc. shares experienced a significant increase, partly fueled by optimism surrounding the imminent launch of spot bitcoin ETFs. However, JPMorgan analyst Kenneth Worthington is expressing concerns that this positive sentiment may now flip to bearish. In fact, the potential for significant profits in the crypto industry resulting from recently introduced ETFs has been speculated to be a “mirage.”

Previously, JPMorgan had categorized COIN with a “neutral” rating but had predicted a price target of $80 by December 2024. The investment bank suggests that the listing of multiple spot Bitcoin ETFs could be a crucial factor affecting the industry, potentially leading to an overestimation of value and impacting stock prices.

JPMorgan Downgrades Coinbase

The analysts at JPMorgan downgraded Coinbase’s stock from a “neutral” to an “underweight” rating, citing the declining price of BTC and the introduction of spot Bitcoin ETFs.

Worthington stated that the anticipated impact of spot Bitcoin ETFs – which was considered a catalyst for reviving the cryptocurrency ecosystem – is likely to disappoint market participants. In the latest assessment, he downgraded Coinbase’s stock (COIN) from neutral to underweight, expressing the belief that enthusiasm for crypto ETFs may diminish further.

This, in turn, could lead to decreased token prices, reduced trading volume, and diminished ancillary revenue opportunities for platforms like Coinbase.

The analyst kept his price target for Coinbase shares at $80, indicating a possible decrease of over 35% in what he anticipates to be a more difficult year. In Tuesday’s activity, the stock dropped by nearly 4%.

Worthington wrote,

“While it has only been ~1 week since launch, the initial net inflows into Bitcoin ETFs seems to be far less than the cryptocurrency community was touting in the financial media, and less than what we witnessed in the first week of flows into the Gold ETF when it launched in 2004.”

Following Worthington’s downgrade, 11 out of 27 analysts tracked by FactSet now hold bearish ratings on Coinbase shares, while eight are bullish, and another eight have hold-equivalent ratings.

Strong Volumes by Spot Bitcoin ETFs

Bitcoin ETF issuers, excluding Grayscale, have together purchased more than 86,000 BTC at an average cost of $42,000, pushing the total investment to $3.63 billion. Among these issuers, iShares from BlackRock leads with a significant holding of over $1.3 billion in BTC. Following closely in the second position is Fidelity, with BTC holdings valued at $1.22 billion.

Bitwise and ARK/21Shares secure the third and fourth positions, holding assets worth $409.23 million and $364.94 million, respectively.

In the fifth position, Invesco holds a total BTC value of $249.49 million. VanEck holds the sixth position, with holdings valued at approximately $89.21 million. Completing the lineup are Valkyrie, Franklin Templeton, and WisdomTree, adding to the diversity of Bitcoin ETF issuers in the market.