Berenberg Observes a Deceleration in Coinbase Trading Volume Amid Ongoing Crypto Winter
In the third quarter, Coinbase’s trading volumes in the United States appear to have declined more than initially anticipated, according to a research report from investment bank Berenberg released on Tuesday. The report from Berenberg, citing information from The Block, states that Coinbase’s trading volume dropped by approximately 17% on a sequential basis and about 52% year-on-year.
Coinbase is set to announce its third-quarter results on November 2nd. Berenberg expressed concerns about Coinbase’s consumer take rate being vulnerable to compression due to increased competition for market share within the crypto industry, which is currently experiencing lower trading volumes.
Mark Palmer, an analyst at Berenberg, pointed out that their cautious outlook on Coinbase Global is not primarily based on concerns about the company’s short-term operational performance but rather on the potential threats to its business posed by regulatory actions and legal challenges in the United States, as well as those that may arise as the regulatory scrutiny of the cryptocurrency market continues. The note also mentioned that political challenges could mitigate the impact of Coinbase’s intensified lobbying efforts and suggested that recent reports about the use of crypto by groups like Hamas might complicate the legal status of cryptocurrencies even further.
Despite the ongoing cryptocurrency market downturn and the regulatory hurdles facing Coinbase, the report noted that the company’s shares are currently trading at a valuation similar to their late 2021 levels, which marked the peak of the last cryptocurrency bull market. It’s worth mentioning that Coinbase’s stock has risen by more than 112% this year, outperforming the 72% gain in bitcoin (BTC) and the 29% increase in the Nasdaq stock index.
Berenberg maintained its hold rating on Coinbase stock and set a price target of $39. Coinbase’s shares closed at $77.46 on Tuesday.
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