Coinbase’s Wild Ride: Lawsuits, Bitcoin Dips, and Analyst Frowns

Coinbase’s share price has had ups and downs lately because of a court case with the SEC. The SEC says Coinbase broke investment rules about listing new things to buy. Analyst Owen Lau from Oppenheimer Bank thinks the unclear court case may keep causing Coinbase’s share price to change significantly.

In an interview with Yahoo Finance, Lau said Coinbase’s current stock price of around $125 could see near-term price swings due to the lawsuit. “There is still a regulatory overhang. We still don’t have clear regulations in the United States right now,” Lau stated.

"This bitcoin ETF can bring in new investors," Oppenheimer & Co. Inc. analyst Owen Lau says. "To me, I think it's a net positive for Coinbase longer-term…" pic.twitter.com/9GtRe6JLIM

— Yahoo Finance (@YahooFinance) January 23, 2024

However, Bloomberg litigation analyst Elliot Stein recently revealed a 70% chance Coinbase will receive a full dismissal of the SEC lawsuit, which could remove regulatory uncertainty. Coinbase’s stock price has declined around 28% over the past 30 days. But it has seen an overall 67% gain in the last three months, which Lau attributes to optimism around the SEC approving a spot Bitcoin exchange-traded fund (ETF).

I went into SEC v. Coinbase hearing thinking $COIN would, on this motion, win dismissal of SEC's primary claims (concerning trading) but maybe not staking and broker claims. I left thinking COIN would win full dismissal. Snippet below and full note here: https://t.co/UfjiByMLzS https://t.co/7Y2Z93Nrwt pic.twitter.com/yLUUEwdVkl

— Elliott Z. Stein (@NYCStein) January 19, 2024

Coinbase: ETF Approval & Analyst Downgrade Impact

The first Bitcoin-traded fund (ETF) was formed on Jan 10, 2023. Since then, Bitcoin’s price has fallen from $48,969 to about $38,525. After experiencing a price bounce, it has since regained its value and is currently trading at $41,847. Lau thinks Bitcoin’s price might keep falling in the short term until something new impacts the market. Lau said, “I think Bitcoin’s price will likely keep falling for a little while until the next big event affects it”.

Investment bank JPMorgan also recently downgraded Coinbase’s stock to an “underweight” rating. JPMorgan analysts cited declining Bitcoin prices and early listings of spot Bitcoin ETF shares as reasons for the downgrade.

The ongoing SEC lawsuit, the recent decline in Bitcoin prices, and analyst downgrades create uncertainty around Coinbase’s stock price in the short term. Lau and other analysts anticipate continued volatility until regulatory clarity and the next Bitcoin rally. For now, the crypto exchange faces headwinds as the crypto market enters 2023.

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