According to a report by CoinDesk, JPMorgan stated in a research report on Monday (22nd) that the launch of the main positive catalyst of the cryptocurrency market last year – a Bitcoin spot ETF, could undergo a transformation in 2024 and disappoint investors. As a result, the investment bank downgraded the stock rating of the US cryptocurrency exchange Coinbase (COIN) to “Underweight”.
JPMorgan downgraded the rating of $COIN from “Neutral” to Underweight, with a target price of $80 unchanged. COIN closed at $124.19 on Tuesday (23rd), down 3.14%. JPMorgan stated that despite the exchange making progress in many important initiatives, it may be more challenging in 2024 after the stock rose 390% last year.
The analyst team led by Kenneth Worthington wrote in the report:
The report pointed out that analysts are concerned that any disappointment in ETF fund flows could severely impact the sentiment driving the rebound of cryptocurrencies, especially evident in the market sentiment since the second half of 2023, particularly in the rally since October.
JPMorgan pointed out that the price of Bitcoin has been under pressure, falling below $40,000, and believes that enthusiasm for cryptocurrency ETFs may further diminish, resulting in price declines, reduced trading volumes, and decreased revenue opportunities for companies like Coinbase.
The report added that if an Ethereum spot ETF is approved, Coinbase is expected to play a similar custody, oversight, and trading role.
Economist Peter Schiff, who has long criticized Bitcoin, also does not have a positive outlook on the future performance of Coinbase. He stated on X platform that investors who buy Bitcoin spot ETFs will “experience worse outcomes”. Despite Coinbase holding the Bitcoins that these ETFs own, speculators who previously traded Bitcoin through Coinbase are now turning to trading spot ETFs. In addition, many investors who originally bought $COIN as a substitute for Bitcoin are now switching to buying these ETFs.
With the recent decline in the cryptocurrency market, Schiff continues to criticize Bitcoin and those who publicly favored Bitcoin before the spot ETF was launched. He believes that all Bitcoin spot ETFs are currently in a bear market, meaning they have fallen by 20% or more from their highs.
Schiff also mentioned ProShares’ US first Bitcoin futures ETF “BITO” launched in October 2021, noting that the product has dropped by over 50% in two years. He believes that investors who buy any of the 11 Bitcoin spot ETFs will experience worse outcomes.