The launch of a physical Bitcoin exchange-traded fund (ETF), which was a major positive for the crypto market last year, could reverse in 2024 and disappoint investors. JPMorgan pointed this out in a research report on the 22nd, downgrading the stock rating of Coinbase, a major U.S. cryptocurrency trading company, to underweight.

JP Morgan lowered its rating from neutral to underweight and kept its price target at $80 (approximately 11,600 yen, equivalent to 145 yen to the dollar). Coinbase stock fell 4.1% in pre-market trading to $122.90. JPMorgan said 2024 could be a more difficult year even though Coinbase is making progress on a number of important initiatives, although the stock was up 390% last year.

Possibility of disappointment with Bitcoin ETFs

Analysts led by Kenneth Worthington said: “We believe Coinbase is the dominant American exchange in the crypto ecosystem and a leader in global crypto trading and investment. “We continue to watch, but believe the Bitcoin ETF material that has brought the ecosystem out of winter will disappoint market participants.”

The U.S. Securities and Exchange Commission’s (SEC) approval of a Bitcoin spot ETF last month heralded a new era for crypto assets and was expected to bring mainstream money into the space. The launch of physical ETFs allows investors who were previously prohibited from owning digital assets to access the sector without owning the underlying assets themselves.

The report concludes, “We are concerned that given such enthusiasm for Bitcoin ETFs and the subsequent new capital flows into the crypto asset ecosystem, any disappointment in ETF flows could lead to “This means that the enthusiasm that has driven the rise in crypto assets primarily in the second half of 2023, especially since October, may wane.”

Bad impact on companies

JPMorgan noted that Bitcoin price is already under pressure, with the price below $40,000. For companies like Coinbase, he sees the possibility of “further waning of enthusiasm for crypto ETFs, resulting in lower token prices, lower trading volumes, and fewer ancillary revenue opportunities.” It pointed out.

The report states that Coinbase is expected to play a similar custodian, oversight, and trading role for physical Ethereum ETFs if approved.

Bitcoin has continued to fall since the spot ETF was approved, hitting a two-month low on the 23rd. The bankruptcy estate of failed cryptocurrency exchange FTX has released the equivalent of $1 billion since the Grayscale Bitcoin Trust (GBTC) was converted into an ETF, which has led to a sell-off in the underlying asset, Bitcoin. increasing pressure.

｜Translation and editing: Rinan Hayashi
｜Image: Matthew Foulds/Unsplash
｜Original article: Coinbase Falls After JPMorgan Downgrades Stock to Underweight on Disappointing Bitcoin ETF Catalyst