Crypto exchange Coinbase (COIN) is now faced with a number of new headwinds because of the collapse of rival FTX, Bank of America said Friday, as it downgraded its rating on the stock to neutral from buy.
The bank also slashed its price target to $50 from $77. The shares were up marginally in premarket action to $49.23, but are down nearly 30% since the start of the month.
While BofA is confident that Coinbase is not another FTX, that doesn't “make the company immune from the broader fallout in the crypto market.
”The analyst team sees three potential headwinds: Dampened trading activity thanks to weaker confidence in crypto, delayed regulatory clarity and the possibility that contagion leads to an even wider fallout for the industry," analysts from Bank of America wrote.
Longer term, the bank said, the FTX debacle may lead to market-share gains for Coinbase, because the exchange can point to its regulatory compliance and security of customer assets.
Bank of America had previously been a bull on Coinbase. In January, it gave the stock – at that time trading above $230 – a buy rating and $340 price target.
CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.