As a seasoned financial analyst with extensive experience covering the crypto sector, I find Citi’s recent upgrade of Coinbase from “Neutral” to “Buy/High Risk” intriguing. Having closely followed the regulatory landscape and its impact on cryptocurrency companies, I can attest to the potential significance of the Supreme Court’s decision to overturn the Chevron precedent.
Leading cryptocurrency exchange Coinbase has attracted notice from investors following CITI’s assignment of a “buy” rating to its COIN stock. This announcement arrives prior to the expected Q2 earnings report from Coinbase in early August, igniting debates about possible explanations for this positive forecast. In this piece, we delve deeper into the recent upgrade from Citi and explore potential implications for Coinbase’s stock performance.
Coinbase Receives Buy Rating From CITI
CITI upgraded its recommendation for Coinbase from “Neutral” to “Buy with High Risk” based on recent developments in the U.S. political and legal arena. The analysts at CITI think these changes could reduce Coinbase’s regulatory risks. For instance, the Supreme Court’s ruling to overturn the Chevron doctrine is considered a positive sign for the cryptocurrency industry as a whole.
In light of the latest findings, the Chevron decision may result in heightened court review of the SEC’s enforcement-driven regulations. Consequently, crypto defendants could potentially utilize the Major Questions Doctrine, instigating a more detailed analysis of the SEC’s regulatory approaches.
Further, the analysts propose that a more lenient regulatory climate might draw institutional investment and encourage cooperation between the crypto and conventional financial industries. Such a development could bring about substantial advantages for Coinbase.
Although CITI maintains a optimistic viewpoint, it identifies potential hazards for Coinbase. The current administration’s enforcement strategy and the SEC’s position on staking present obstacles. Approximately one-third of tokens functioning on the blockchain depend on staking. However, Ethereum ETF managers are prohibited from receiving staking rewards.
The effect of this limitation on COIN’s operation is noteworthy, particularly since proof-of-stake tokens such as Ethereum play a crucial role in energy-efficient cryptocurrency usage.
What’s Next?
In their latest analysis, Citigroup has bumped up Coinbase’s estimated price to $345 from its previous $260, signaling growing optimism towards the company’s future performance. Furthermore, the Citigroup report hints that the approval of Spot Ethereum ETFs in the US market could serve as a significant boost for Coinbase.
The introduction of this crypto ETF by Coinbase indicates a possible trend of more such products entering the market. This could result in wider cryptocurrency acceptance and increased revenue from custody services for exchanges. Furthermore, analysts have pointed out that Coinbase’s risk-reward profile has become more favorable, specifically regarding its legal battle with the SEC.
As a crypto investor, I’ve noticed that despite the encouraging news about COIN, its stock price still dipped around 1% to $263 during trading hours. On a year-to-date basis, this stock has seen impressive growth of nearly 70%, and over the past month, it has risen by approximately 25%. With Q2 FY24 earnings results just around the corner on August 1, after market close, all investors’ attention is focused on this upcoming event.
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2024-07-23 17:32