Cryptocurrency prices resumed their slump, hurting Coinbase and related equities
Shares of Coinbase Global (COIN) fell more than 7% Wednesday, lagging crypto-exposed peers as the price of Bitcoin (BTC) and Ethereum (ETH) fell over 6% and 8%, respectively, and Binance.US said it will introduce zero-fee trading for bitcoin.
Other crypto-exposed stocks, including Galaxy Digital (GLXY) and MicroStrategy (MSTR), held up, with Galaxy adding 0.6% in Toronto, and MSTR losing 1%. Crypto miners fell. Cipher Mining (CIFR), Hive Blockchain (HIVE), Hut 8 (HUT) and Marathon Digital (MARA) all dropped at least 3%.
The race to offer customers little or no fees on trading continues and could add to competitive pressures for exchanges. Binance.US said Wednesday it will offer zero-fee bitcoin trading on its platform as it seeks to attract more users.
Coinbase will continue to face headwinds in the current crypto downturn, especially in light of Celsius and Babel Finance’s struggles, Mark Palmer, an equity research analyst at BTIG told clients in a note Wednesday. Palmer sees Coinbase being able to weather the storm given its larger size and being well capitalized.
“While we are not at all dismissive of the impact of the current crypto market downturn, we also believe any notion that COIN would be unable to survive this latest challenge is misguided in light of the facts on the ground,” Palmer wrote. He reiterated a buy recommendation and lowered his price target on Coinbase to $290 from $380.
Meanwhile, Mizuho equity research analyst Dan Dolev said he saw potential signs of “crypto fatigue” in trading patterns.
“COIN volumes appear to surge during sell-offs, but fail to bounce back during brief rallies,” Dolev said in a note to clients. “As evidence, average daily trading volume on the COIN platform on Bitcoin down-days was 15% higher than volumes on Bitcoin up-days. In recent months, however, down-day volumes are 42% higher than up-days, or nearly 3x vs. the prior ratio.” Dolev has a neutral rating on COIN with a $45 price target.