Coinbase started at hold as lack of trust makes investing in crypto challenging in the near term

Small cap stock jumps 8% after bagging an order worth ₹ 819 Cr; Brokerage sees an upside of 39%

Coinbase started at hold as lack of trust makes investing in crypto challenging in the near term — Jefferies

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By Sam Boughedda

Coinbase (NASDAQ:COIN) was initiated with a Hold rating and $35 per share price target by Jefferies analyst on Monday.

They said in a research note that the immediate impact is "decidedly negative with trading volumes facing incremental pressure."

Coinbase shares have jumped over 15% Monday as the general cryptocurrency market rises as a result of the overall positive market sentiment.

"The fallout from FTX has called into question the safety, security, and legitimacy of the broader crypto ecosystem—exacerbating what was already a difficult operating environment as retail trading volumes have been under pressure from falling crypto prices," wrote the analysts. "With no clear path for investor trust/optimism to return to the asset class, investing in the space is challenging in the near-term."

However, the analysts acknowledged that even though Coinbase will be acutely pressured in the near term as its core retail customer base trades less frequently in down-markets, they believe it has staying power.

This is due to its "(1) healthy balance sheet with over $5bn in cash (2) front-footed approach to regulatory compliance, (3) prudent risk management (minimal exposure to FTX, none to Celsius/Three Arrows), and (4) legitimacy as a public/audited company."

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