On Monday Coinbase starts the week with a “Hold” rating and a target price of $35 per share by analyst Jefferies.
In a research note they explained that the immediate impact is “totally negative, as trading volumes face more and more pressure.”
Coinbase shares have risen more than 15% on Monday, as the overall cryptocurrency market has risen as a result of overall positive market sentiment.
“The fall of FTX has called into question the security, safety and legitimacy of the crypto ecosystem in general, compounding an already difficult operating environment in itself, as retail trade volumes have come under pressure from falling cryptocurrency prices,” analysts wrote. “Without a clear path to regaining investor confidence/optimism, investing in space is a short-term challenge.”
However, analysts also acknowledged that although Coinbase will be under a lot of pressure in the short term, because its main retail customer base doesn’t trade as many in bear markets, it has the capacity to sustain itself.
This is due to its “(1) healthy balance sheet with more than $5 billion in cash, (2) proactive approach to regulatory compliance, (3) prudent risk management (minimal exposure to FTX, none to Celsius/Three Arrows) and (4) legitimacy as a public/auditee company.”