Coinbase Global Inc. has witnessed a 62% surge in its shares this month, capturing the attention of investors amidst the current volatility in the cryptocurrency landscape.
While FTX’s Sam Bankman-Fried faces a fraud conviction, and Binance navigates regulatory scrutiny, traders are flocking to Coinbase, betting on increased business, especially if authorities greenlight Bitcoin-focused exchange-traded funds (ETFs).
This surge, adding $12 billion to Coinbase’s market value in November alone, marks a significant turnaround for the largest US crypto exchange.
The stock has more than tripled in 2023, defying the broader market trends and eclipsing the average analyst price target of approximately $84.
“Coinbase is in a better position today than really any other point as a public company,” notes Needham & Co. analyst John Todaro.
He sees 2022 and 2023 as pivotal years, weeding out weaker players in the industry. “Those who survived are going to come out of that stronger. And Coinbase is one that survived.”
The optimism surrounding Coinbase is fueled by regulatory clarity and the potential approval of US-listed Bitcoin ETFs, expected as early as January, according to Bloomberg Intelligence. Bitcoin’s nearly 130% surge in 2023 adds to this positive outlook.
Investors who bet against Coinbase shares have faced losses of $1.3 billion in the past 30 days, as the company overcame losses reported for seven consecutive quarters.
While competitors face legal challenges, the resolution of Binance’s dispute with the US Department of Justice is seen as a positive for Coinbase.
“A healthy development for the industry is positive for Coinbase, and an abrupt exit of large players is not,” highlights Oppenheimer & Co. analyst Owen Lau. The settlement with Binance is expected to uphold higher compliance standards for crypto exchanges.
Despite this surge, maintaining momentum remains uncertain, with over 40% of Wall Street analysts holding a hold-equivalent rating for Coinbase.
Notably, Cathie Wood’s Ark Investment Management LLC, although reducing its Coinbase holdings, remains the fourth-largest shareholder, emphasizing a cautiously optimistic stance in the crypto space.
