Coinbase Global Inc. witnessed a substantial increase in its stock value last year, partly driven by optimism surrounding the impending launch of spot Bitcoin ETFs. However, JPMorgan analyst Kenneth Worthington has raised concerns that this optimism may shift towards bearish sentiments. Worthington speculates that the anticipated substantial profits in the crypto industry due to the introduction of ETFs might turn out to be illusory.
Previously, JPMorgan had assigned a “neutral” rating to COIN’s stock but had set a price target of $80 by December 2024. The investment bank believes that the introduction of multiple spot Bitcoin ETFs could be a pivotal factor impacting the industry, possibly leading to an overestimation of value and influencing stock prices.
JPMorgan Downgrades Coinbase
JPMorgan’s analysts downgraded Coinbase’s stock from “neutral” to “underweight” due to concerns about the declining price of BTC and the introduction of spot Bitcoin ETFs.
Worthington expressed doubts that the expected impact of spot Bitcoin ETFs, previously considered a catalyst for the cryptocurrency ecosystem, may fail to meet market expectations. As a result of this assessment, he downgraded Coinbase’s stock (COIN) from neutral to underweight, anticipating that enthusiasm for crypto ETFs could wane further.
This could potentially result in lower token prices, reduced trading volumes, and diminished additional revenue opportunities for platforms like Coinbase.
While maintaining his price target for Coinbase shares at $80, Worthington suggests a possible decrease of over 35% for what he expects to be a more challenging year. In Tuesday’s trading, the stock experienced a nearly 4% drop.
Worthington commented, “Although it has only been about a week since the launch, the initial net inflows into Bitcoin ETFs appear to be significantly lower than what the cryptocurrency community was promoting in the financial media, and less than what we observed during the first week of flows into the Gold ETF when it was 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 Performance by Spot Bitcoin ETFs
Excluding Grayscale, Bitcoin ETF issuers have collectively acquired more than 86,000 BTC at an average cost of $42,000, resulting in a total investment of $3.63 billion. Among these issuers, BlackRock’s iShares leads with a substantial holding of over $1.3 billion in BTC. Fidelity is in the second position with BTC holdings valued at $1.22 billion.
Bitwise and ARK/21Shares hold the third and fourth positions, with 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 is in the sixth position, with holdings valued at approximately $89.21 million. The lineup is completed by Valkyrie, Franklin Templeton, and WisdomTree, contributing to the diversity of Bitcoin ETF issuers in the market.