The latest research by Berenberg Investment Bank points to a striking fact about the Coinbase exchange in the third quarter. Accordingly, it revealed that there was a significant decrease in transaction volumes for the US market. The study indicates a significant decrease of 51% compared to the previous year. It also marks a sequential decline of 16.8%. It is worth noting that this announcement comes before Coinbase’s official announcement of its third quarter results, scheduled for November 2.
Concerns about customer base for Coinbase
Berenberg expresses concerns that the Coinbase exchange could face a potential decline in its customer base. This decline is attributed to intensifying competition in the cryptocurrency space, especially in segments with lower transaction volumes. While the exchange is a market leader, new participants are vying for a slice of the pie.
Mark Palmer, a leading analyst at Berenberg, comments on the situation of Coinbase Global. The bank’s immediate concern does not revolve around the exchange’s operational efficiency for the coming quarters. Instead, the focus is on the mounting regulatory challenges and legal battles that Coinbase is currently grappling with in the US. As regulatory scrutiny of cryptocurrencies tightens, these challenges are expected to intensify. Political factors may limit the effectiveness of Coinbase’s lobbying efforts. Additionally, recent news highlighting the use of cryptocurrencies by organizations such as Hamas attracts attention. Accordingly, this may further complicate the legal situation of digital currencies.
Coinbase’s stock flexibility
Interestingly, despite the decline in trading volumes and increasing regulatory pressures, one situation stands out. Accordingly, the share prices of the Coinbase exchange remain quite resilient. The current valuation is on par with figures at the end of 2021, when crypto volatility was at its peak. The research also notes that Coinbase’s stock is up an impressive 112% this year. In comparison, Bitcoin’s value increased by 73%. Additionally, the Nasdaq stock index gained 28.9%.
Despite these developments, Berenberg maintains a neutral stance on the shares of the Coinbase exchange. Accordingly, it confirms the hold rating. He also sets a price target of $39.9. At the time of last report, Coinbase’s shares were valued at $77.40. When we look at Kriptokoin.com, the decrease in Coinbase’s transaction volumes draws attention. Additionally, increased regulatory scrutiny and the challenges of legal battles are factors that cause concern. Coinbase has demonstrated resilience in the face of these problems. However, the coming months will reveal whether this trend will continue or whether new challenges will reshape the future of the stock market.
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