Why is Coinbase back on the decline?
The cryptocurrency exchange’s shares took a huge hit following another bout of not-so-good news from China regarding its stance on crypto trading.
- Coinbase Global Inc (NASDAQ: COIN) share price fell over 7% since the start of the week
- The decline came after China’s central bank said it urged several banks and fintech firms to step up their checks on cryptocurrency transactions
- Bitcoin and Ethereum, the two largest digital currencies, sunk by 10% and 14% respectively following the news
- Analysts on average still envision a 76.5% upside potential on the stock, despite its first ever ‘sell’ rating earlier this month
- Ready to trade Coinbase shares but only want to put up a fraction of the cost? You can do that with CFDs. Open a trading account with us today.
Coinbase stock price: What’s the latest?
Coinbase Global shares fell as much as 4.4% on Monday (21 June 2021), after China’s central bank said it has intensified its crackdown on cryptocurrency trading.
During a recent meeting, the People’s Bank of China (PBOC) urged several banks and payment platforms to step up their checks on cryptocurrency transactions conducted on their channels, Reuters reported.
‘Speculative trading in virtual currencies roils economic and financial order, spawns the risks of criminal activities such as illegal asset transfers and money laundering, and endangers people's wealth,’ the PBOC said in a statement.
The PBOC had reportedly advised financial institutions, including China Construction Bank, Industrial and Commercial Bank of China and Ant Group’s Alipay, to begin more thorough investigations into clients’ accounts, and freeze the ones that had engaged in cryptocurrency transactions.
Coinbase opened 3.5% lower on Tuesday (22 June) at US$214.80.
Bitcoin, the world’s largest and most traded digital currency, also sunk nearly 10% on the day to a two-week low of US$32,600 following the news.
Ethereum, the second most valuable crypto asset, took a 14% tumble to under US$2,000.
How do analysts rate Coinbase?
This latest development comes a month after the country’s cabinet, the State Council, had stated that it would tighten restrictions on bitcoin trading and mining.
Besides issuing a warning to investors against speculative crypto trading, the State Council also banned financial and payment institutions from providing cryptocurrency services.
Coinbase then dropped off nearly 10% to a then-low of US$224 a share.
For now, analysts still appear upbeat on the cryptocurrency trading platform’s stock, with a majority of analysts - 11 out of 16 - rating it a ‘buy’, according to the latest sentiments published by MarketBeat.
The analysts have also given a consensus price target of US$378.33, which equates to a 76.5% upside potential from its last traded price of US$215.36.
The latest rating and price estimate came from Canaccord Genuity analyst Joseph Vafi, who initiated coverage with a ‘buy’ rating and US$285 target.
His prediction is based on the fact that the stock is a ‘super on-ramp’ to the cryptocurrency market, and that the business itself looks set to benefit from the envisioned blockchain payments boom.
On the other hand, Raymond James analyst Patrick O'Shaughnessy gave COIN its first ever ‘sell’ call, stating that while cryptocurrency is ‘a great unknown’, fee compression is not.
The analyst believes that Coinbase’s premium pricing is bound to come under pressure at some point due to low barriers to entry to the space, thus limiting its competitive advantage in the long run and potential revenue growth rates.
What is your call on Coinbase?
Take your position on US shares for just a small initial deposit with Contracts for Differences (CFDs).
Whether you trade or invest, you’ll get access to pre-market and after-hours trading on 70 US stocks.
Open an account to get started.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
Please see important Research Disclaimer.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.