Jefferies wrote that Coinbase would be “acutely pressured in the near term” as retail customers withdraw from crypto after the FTX crumble.
Unlike many crypto exchanges that shared from the FTX crash, Coinbase (NASDAQ: COIN) could be one of the very few to benefit from the collapse. FTX’s fall left a mark on the entire crypto space, dragging many companies as it failed. Many investors also lost their assets as companies counted their losses. The fallout raised questions about the crypto ecosystem’s safety, security, and legitimacy. While many exchanges struggle amid the crypto winter, Jefferies analysts believe that Coinbase would ultimately benefit from the failure of FTX.
In a note, the Jefferies analysts wrote about how Coinbase maintains itself as a premium brand. They refer to the crypto company as an onshore and regulated entity with a healthy balance sheet. Due to its healthy balance sheet, analysts believe that Coinbase should be able to navigate through the industry-wide fallout caused by the FTX demise. However, they added that “the immediate impact is decidedly negative with trading volumes facing incremental pressure.”
Coinbase Begins to Soar as FTX Crashes
In addition, the broker initiated coverage of the stock on Monday with a hold rating with a price target of $35 per share. The rating follows Cowen’s downgrading COIN from outperform to market perform on Thursday. According to Cowen, the downgrading results from a lack of clarity on possible recovery in trading volumes after the FTX’s saga. Coinbase saw its shares rally 15.6% to $38.27. At press time, the crypto company is down 0.18% to $38.20. The company has grown 8.14% since the year began and increased by nearly 14% in the last five days. The analyst wrote:
“We expect COIN to regain a portion of its share losses from the 2+ years, but still see a steep climb to Street estimates in FY25, which we believe embed a bitcoin recovery to ~25k.”
The analysts did not fail to mention that the exchange may face a possible hit in the future. Jefferies wrote that Coinbase would be “acutely pressured in the near term” as retail customers withdraw from crypto after the FTX crumble. However, the company has the cash strength to weather through the possible storm. The note also emphasized that Coinbase, as a legitimate, publicly listed, and audited company, is a chance for the company to benefit from the FTX demise. They added that FTX exit gives Coinbase lesser rivals and the chance to regain market share.
“COIN’s market share has trended negatively over the past two years, but we expect some of these losses to be pared in the near-term… and over a longer horizon as Coin can re-establish its status as the de-facto on-ramp into crypto, should we see another up-cycle,”experts explained.
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