JPMorgan cuts Coinbase outlook on weak ETF volume impact

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JPMorgan cuts Coinbase outlook on weak ETF volume impact
Credit: © Reuters.

On Monday, JPMorgan (NYSE: JPM ) expressed a negative stance on Coinbase (NASDAQ: COIN ) Global, Inc. (NASDAQ:COIN), citing disappointing trading volumes following the launch of a Bitcoin exchange-traded fund (ETF). The firm's financial specialist pointed out that the anticipated catalyst of the Bitcoin ETF had passed, but the expected increase in trading volumes did not materialize.

The analysis highlighted that the initial net inflows into Bitcoin ETFs by the end of January were significantly lower than anticipated, totaling approximately $1.5 billion. This figure stands in stark contrast to the robust inflows observed following the launch of Gold ETFs in 2004. JPMorgan's outlook for Coinbase in 2024 is bearish, with the suggestion that the year could present more challenges for the company.

The firm's specialist elaborated on the situation, noting that the crypto community's expectations for the Bitcoin ETF had not been met. The launch, which was long-awaited, did not lead to the substantial trading activity that many had hoped for. The comparison to the Gold ETFs' performance nearly two decades ago underscores the disappointment in the market's reaction to the Bitcoin ETF.

The weekly recap by JPMorgan's financial specialist also included key trading flows, research, and ideas. It emphasized the bearish view on Coinbase, indicating that the firm's analysis is based on recent trading data and market responses.

The financial institution's negative outlook on Coinbase suggests that investors and the crypto community may need to adjust their expectations regarding the impact of new financial products like Bitcoin ETFs on trading volumes and overall market activity. JPMorgan's analysis serves as a cautionary note for those anticipating quick and significant market changes following product launches in the cryptocurrency space.

InvestingPro Insights

In light of JPMorgan's analysis, recent data from InvestingPro provides additional context for investors considering Coinbase Global , Inc. (NASDAQ:COIN). Despite the bearish sentiment expressed by the financial institution, InvestingPro Tips indicate that analysts have recently revised their earnings upwards for the upcoming period, hinting at potential optimism in the face of adversity. Additionally, Coinbase has experienced a significant return over the last week, with a 21.05% price total return.

The InvestingPro Data metrics reveal a mixed financial landscape for Coinbase. The company is trading at a high Price / Book multiple of 5.74 as of the last twelve months ending Q3 2023, which may raise concerns about valuation. Moreover, while the company has shown a notable revenue growth of 8.09% in Q3 2023, it has also been grappling with a substantial decrease in revenue growth of -47.88% over the last twelve months. This could be indicative of the challenges that JPMorgan's specialist is cautioning investors about.

Investors looking to delve deeper into Coinbase's financials and future outlook can explore additional InvestingPro Tips by visiting https://www.investing.com/pro/COIN. There are more tips available that can provide a comprehensive analysis of the company's performance and potential. For those interested in a yearly or biyearly Pro and Pro+ subscription, use the coupon code PRONEWS24 for an additional 10% off, offering further insights to navigate the volatile crypto market with confidence.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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