• Analyst Dan Dolev warned that Coinbase Global Inc. could give up its entire year-to-date gain in the coming weeks and months.
• A survey found that retail traders are not participating much despite the recent surge in Bitcoin’s price.
• Dolev has an „underperform“ rating on Coinbase stock with a $30 price objective, representing a 40% downside from here.
Coinbase Global Inc. is facing a potentially significant dip in its stock prices, according to Dan Dolev, a senior analyst at Mizuho. Dolev has issued an “underperform” rating on the cryptocurrency exchange and announced a $30 price objective, representing a 40% downside from here.
The warning is based on a recent survey that suggested retail traders are not participating much despite the recent surge in Bitcoin’s price. Retail trading is Coinbase’s bread and butter, as it accounted for 83% of its 2021 revenue. The survey found that roughly 90% of the traders that were on the sidelines in December continue to be inactive this month, and over 33% that traded last month are sitting it out in January.
Dolev also noted that Coinbase’s share of combined volumes during the rally (bitcoin) was 5.3%, about in line with levels prior to the rally. These findings lead to expectations for summer revenue to be significantly lower than the first quarter of 2021, potentially putting pressure on take rate margins.
Coinbase stock is currently up over 50% for the year with a recent surge, despite Coinbase’s recent announcement it is ending its operations in Japan. However, Dolev believes that the “downside risk is greater than the upside potential” and that Coinbase stock could make a new low in the coming weeks and months.
The cryptocurrency exchange has been in the news recently due to its high-profile listing on the Nasdaq which saw its stock price more than double in one day. Nevertheless, Dolev is warning that unless retail investors show greater interest in the cryptocurrency market, Coinbase stock could be in for a significant correction.