- Coinbase’s stock has been upgraded to ‘BUY’ by Citi analysts, citing a bullish trajectory.
- The analysts believe regulatory clarity in the crypto space is a significant catalyst for this outlook.
- “Shifts in the U.S. Election landscape and the Supreme Court’s overturning of the long-standing Chevron precedent has changed our view on Coinbase’s regulatory risks,” said Peter Christiansen of Citi.
Citigroup analysts project a significant rally for Coinbase’s stock, expecting a 33% increase to $345. Discover the catalysts driving this optimistic outlook.
Coinbase’s Upgraded Status: A 33% Potential Rally
Citigroup analysts have recently upgraded Coinbase’s (COIN) shares to ‘BUY,’ projecting a potential price surge to $345, a significant 33% rise from its current market price of approximately $260. This optimistic outlook is primarily underpinned by the evolving regulatory clarity in the crypto market.
Regulatory Developments: A Beacon of Hope
The shift in the U.S. electoral landscape and recent judicial decisions, notably the Supreme Court’s overturning of the Chevron precedent, have reshaped Citi’s perspective on Coinbase’s regulatory exposure. This evolving legal framework is seen as a considerable boon, poised to draw both institutional and retail investors towards Coinbase, amplifying its market potential.
Further Catalysts for Growth
In addition to easing regulatory concerns, Citi analysts have identified several crypto-specific factors that could further cement Coinbase’s growth trajectory. Coinbase’s Layer 2 solution on Ethereum (ETH), named Base, has garnered significant traction, suggesting ripe long-term opportunities in user engagement.
Focus on Engagement and Transaction Fees
To capitalize on this momentum, analysts recommend that Coinbase focus on expanding its Base market share while being cautious about transaction fees. “The emphasis should be on increasing engagement through transactions and active user growth, without raising transaction fees excessively, which could create competitive disadvantages,” emphasized the analysts.
Staking Dynamics and ETH ETFs
The absence of a staking feature in recent U.S. spot ETH ETFs is viewed positively for Coinbase. Investors seeking staking yields on ETH are likely to gravitate towards Coinbase, boosting trading volumes on the platform. “Investors preferring native yields on ETH are inclined to purchase digital assets directly from exchanges like Coinbase, enhancing trading volumes compared to the minimal custody fees from ETF inflows,” the analysis further elucidated.
Potential Obstacles and Comparative Performance
While the projection remains bullish, Citi analysts cautioned that a continuation of the current administration’s regulatory enforcement could challenge this outlook. At the time of analysis, Coinbase’s stock had risen by 63% year-to-date, outperforming Bitcoin’s (BTC) 48% gain over the same period, giving COIN holders an additional 15% return.
Conclusion
In summary, Citi’s upgrade of Coinbase’s stock reflects growing confidence in the company’s ability to navigate an increasingly favorable regulatory environment, coupled with strategic operational focuses on user engagement and transaction dynamics. Investors are advised to consider these developments while evaluating their portfolio positioning amid the evolving crypto landscape.
