A leading global financial services firm, JPMorgan has upgraded Coinbase (COIN) shares from Underweight to Neutral, with the surge in cryptocurrency prices following the approval of spot bitcoin exchange-traded funds (ETFs) in the U.S.
The crypto exchange of the Wall Street giant expects its activity levels and earnings to grow with the increase in crypto prices in Q1. The stock was changed from underweight to neutral with an unchanged price target of $80.
On Feb. 15, Analyst Kenneth Worthington informed clients, “Given the acceleration in recent days of flows into Bitcoin ETFs and the significant price appreciation of Bitcoin and now Ethereum, we are returning to a Neutral rating on Coinbase as we see the higher cryptocurrency prices not only sustaining, but improving, activity levels and Coinbase’s earnings power as we look to 1Q24.”
In premarket trading, Coinbase shares rose 6.5% to $170.80, while other crypto-related stocks like MicroStrategy (MSTR) and Marathon Digital (MARA) also saw increases.
JPMorgan observed that the approval of spot bitcoin ETFs, which is initially considered as a sell-the-news event, has instead driven a sustained bitcoin appreciation.
Bitcoin ETFs accrued over $10 billion AUM in their inaugural month, surpassing projections, with Coinbase’s custody arm collaborating with major asset managers, set to generate $25-30 million in fees.
In spite of the warning that Coinbase shares may lag behind in 2024 due to valuation analysis, the bank sees the positive effect that the US spot bitcoin ETFs had on the crypto industry, leading it out of the crypto winter of 2022.
The approval of spot bitcoin ETFs and the subsequent upgrades in Coinbase shares signal a growing confidence in the cryptocurrency market’s potential for sustained growth and institutional adoption.
Also Read: Coinbase Q4 Earnings Preview: Key Points for Investors
