It’s true that the launch of 10 physical Bitcoin ETFs (exchange traded funds) contributed to Coinbase’s better-than-expected fourth-quarter results, but JPMorgan analyst Kenneth Worthington ) is skeptical that the benefits will be as strong as Coinbase hopes.

There are also negative aspects to participating in ETFs.

“While management touted America’s involvement in the Bitcoin spot ETF as a purely positive factor, we see both positive and negative factors, so the true impact on earnings remains uncertain,” Worthington said in a note on Monday. is still unclear.”

Worthington specifically criticized the lack of clarity about the company’s business, which provides custody services for eight out of 10 Bitcoin ETFs.

“Given the media attention and market expectations for the Bitcoin spot ETF, especially in terms of Coinbase’s direct participation and monetization efforts, management is more certain about the economics of the arrangement with the issuer,” the note said. We were hoping that you would provide us with information.”

“Given the lack of details, we remain skeptical about the true monetization effectiveness of these ETFs and their ability to outweigh the potential for lower volumes in the physical market,” Worthington said. “We believe that (a decline in trading volume) is still possible.”

This criticism comes despite Coinbase’s fourth-quarter results announced on the 15th, which exceeded analyst expectations, and the stock price soaring on the 16th, making many analysts positive. is. Some analysts, including Wedbush and JMP Securities, have raised their price targets, and KBW raised its rating from “sell-equivalent underperform” to “market perform.”

ETFs will not leave the exchange

Analysts warned before the ETF’s approval that its low trading fees could drive investors away from exchanges like Coinbase and into the ETF, since it’s easier to deploy money through brokers. Ta.

But Worthington said Coinbase doesn’t seem to think ETFs are driving investors away. “Similar to comments we have heard from Robinhood management, Coinbase believes that a Bitcoin spot ETF will not change customer behavior and that all trades will occur in addition to existing spot trades. He claimed that it appeared to be the case.”

Worthington issued a bearish outlook on Coinbase stock on January 23, citing disappointing ETF material, but shortly before fourth-quarter results due to rising digital asset prices. The outlook has been raised. His 12-month price target of $95 is the lowest among Wall Street analysts, and he maintains a Neutral rating.

｜Translation and editing: Rinan Hayashi
｜Image: Alpha Photo/Flickr
｜Original text: JPMorgan Analyst Criticizes Coinbase’s Lack of Insights Into Its ETF Business