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Piper Sandler analyst Patrick Moley has lowered his rating on Coinbase due to its ongoing legal battle with the Securities and Exchange Commission (SEC) and the persistent uncertainty surrounding cryptocurrency regulation in the United States, as reported by BNN Bloomberg.
On July 5, Moley indicated that the regulatory ambiguities have made it excessively difficult to accurately forecast Coinbase’s future revenues, changing his rating from ‘overweight’ to ‘neutral.’
Moley’s assessment for the largest cryptocurrency exchange in the U.S. has shifted from overweight to neutral. He expects that the trading volumes for the second quarter and the number of monthly active users will reach their lowest point in over two years. Bloomberg noted that Moley remarked,
“Increasing crypto prices have not resulted in higher trading volumes for Coinbase in recent quarters, and the timing of a spot Bitcoin ETF approval remains uncertain.”
Nonetheless, Moley perceives the possibility for Coinbase to become a significant entity in the cryptocurrency sector, contingent upon achieving regulatory clarity.
In June, Moody’s also adjusted Coinbase’s rating to ‘negative’ from ‘stable,’ while acknowledging its “healthy liquidity position.” Moody’s remarked,
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“The affirmation of Coinbase’s ratings reflects its healthy liquidity position, its recent improvements in cash flow generation due to prudent expense management, and because the SEC’s allegations pertain only to certain products of Coinbase, excluding its most actively traded offerings.”
Furthermore, as previously reported by CryptoSlate, Coinbase’s market share has consistently increased, despite the SEC’s legal actions. This rise in market presence, which peaked at 64% in June, has coincided with SEC charges against the company for alleged breaches of federal securities laws.
Although the SEC’s lawsuits have sparked concerns, they have not deterred traditional financial institutions from collaborating with Coinbase. Major firms such as BlackRock, Fidelity, and ARK Investments have selected Coinbase as their surveillance-sharing partner for spot-Bitcoin exchange-traded fund (ETF) applications.
Even amid uncertainty regarding Coinbase’s future revenue, the resubmission of multiple spot Bitcoin ETF applications that explicitly express an intention to engage in a surveillance-sharing agreement with Coinbase demonstrates ongoing confidence in the cryptocurrency exchange.
BNN Bloomberg highlighted that,
“Among the analysts monitored by Bloomberg, 11 recommend purchasing Coinbase stock, while 13 suggest holding it, and eight advise selling.”
The post Coinbase downgraded by analysts amidst regulatory wrangles appeared first on CryptoSlate.
