Stock market: Coinbase (COIN) stock faces a potential 35% decline... Here's why

On the stock market, the launch of Bitcoin spot ETFs has impacted the share prices of crypto companies, notably Coinbase. An analysis by JPMorgan suggests that the COIN stock, listed on Nasdaq, could experience significant drops and go down to $80. The analysis cites two main reasons…

Stock Market: Potential Downfall for COIN Stock, According to JPMorgan

Over the past 13 days, there has been a decline in the digital asset market. Similarly, the share prices of companies related to crypto have also dropped.

For Coinbase, its stock (COIN), listed on the NASDAQ exchange, has fallen by 22% since January 11th. Many hope for a rebound, but a pertinent analysis from JPMorgan, reported by Walter Bloomberg, suggests further decline.

Indeed, the financial giant estimates that the price of Coinbase stock could drop to as low as $80. That represents a 30% decrease from its current stock market quotation of $124.19.

“We downgrade Coinbase to Underweight… After significantly outperforming in 2023 (COIN +390% against SP500 +26%), we see the potential for 2024 to be a more challenging year in the stock market for Coinbase’s shares.“

Is the Drop Due to Bitcoin ETFs?

The analysis suggests two main reasons for this potential drop. First, there is the waning interest in Bitcoin spot ETFs. This has indeed led to reduced volumes and revenues for Coinbase. Indeed, a significant drop in COIN’s share price on the stock market has been observed since the BTC ETFs were launched after SEC approval.

“…with Bitcoin falling below $40,000… we see a greater potential for deflation of enthusiasm for ETFs bringing along with it a drop in trading volume and decline in revenue for companies like Coinbase.“

Then, analysts also expect a drop in the prices of digital assets, leading to a decrease in revenue.

While Coinbase is at the heart of Bitcoin ETFs, it seems that its stock is paying the price. Nevertheless, there is a critical support level around $114.43, which could prop up the price of the COIN stock.