JPMorgan Downgrades Coinbase Stock to ‘Underweight’ after Bitcoin ETF Approvals

In a recent report, analysts from JPMorgan have downgraded the stock of cryptocurrency exchange Coinbase to an “underweight” rating. The downgrade is primarily based on the decreasing price of Bitcoin and the listing of shares of spot BTC exchange-traded funds. According to JPMorgan, the price of Coinbase stock (COIN) is expected to perform poorly in the near future. Data from Nasdaq shows that the COIN price has already declined by over 29% in the last 30 days, reaching $121.65 at the time of this report.

While JPMorgan recognizes Coinbase as the leading cryptocurrency exchange in the United States and a global leader in cryptocurrency trading and investing, they believe that the introduction of Bitcoin ETFs, which were expected to revitalize the market, will disappoint investors. JPMorgan argues that the already declining cryptocurrency prices, with Bitcoin dropping below $40,000, will further deflate with the lackluster enthusiasm for cryptocurrency ETFs. This, in turn, will lead to lower token prices, trading volume, and revenue opportunities for Coinbase.

Previously, JPMorgan had given Coinbase a “neutral” rating but predicted a price target of $80 by December 2024. The analysts believe that the listing of multiple spot Bitcoin ETFs could be a significant catalyst for the crypto industry, but they believe this expectation is unrealistic and could overvalue these investment vehicles, affecting the stock prices of companies like Coinbase.

On January 10, the United States Securities and Exchange Commission (SEC) officially approved the listing of several spot BTC ETFs. However, the approval came after hackers spread a fake tweet about the SEC’s green light for these vehicles, causing uncertainty and volatility in the crypto markets. JPMorgan argues that the crypto industry had set high expectations for the ETF launches, but the reality has fallen short, leading to disappointment in the market.

Since reaching a 30-day high price of over $49,000 on January 11, the price of Bitcoin has dropped over 20% to $38,796. This dip marks the first time in 2024 that the price of Bitcoin has fallen below $40,000. Bloomberg ETF analyst James Seyffart reported that spot BTC ETFs experienced approximately $76 million in net outflows on their seventh day of trading, with outflows increasing rather than slowing down. Despite the SEC’s approval, the performance of these ETFs has not met the high expectations of the crypto industry. In the first three days of trading, ten of the approved funds reached a combined volume of $10 billion.