Home Bitcoin News Why Bitcoin Value's Tumble Is Good Information for Coinbase Inventory – Barron's

Why Bitcoin Value's Tumble Is Good Information for Coinbase Inventory – Barron's

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Bitcoin’s current tumble might need induced a rise in buying and selling quantity for Coinbase.


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Bitcoin’s

end-of-year slide pulled




Coinbase

down with it. The pessimism could be misplaced, one analyst claims.

Bitcoin fell 31% from its Nov. 8 excessive by means of the tip of 2021, and that drop was painful for Coinbase, which fell 29% over the identical interval. The concern is that as Bitcoin and different cryptocurrencies fall, traders will lose interest, hurting the enterprise of crypto exchanges.

These issues are misplaced in keeping with Oppenheimer analyst Owen Lau. Whereas the drop in Bitcoin was painful, it didn’t drive traders away from cryptocurrencies. As an alternative, the decline induced traders to commerce extra. Lau estimates that buying and selling quantity hit a file $540 billion throughout the fourth quarter, 10% greater than his earlier estimate for $489 billion and 17% greater than the Wall Avenue consensus. Consequently, he raised his fourth-quarter gross sales forecast to $2.1 billion, up from $1.9 billion. Lau additionally notes that Coinbase now trades at simply 7.3 instances 2022 gross sales estimates, nicely beneath 19.8 for “comparable high-growth fintech shares.”

No marvel, then, that Lau predicts good issues for Coinbase inventory going forward. “We imagine the basics of COIN, whose year-end 2021 buying and selling volumeis estimated to achieve a file excessive,” he writes. The Avenue seems to underestimate COIN’s earnings energy, and we see 13% upside to income consensus. We discover COIN attractively valued and assume the dislocation presents a horny entry level for traders.”

Lau has an Outperform score on Coinbase, with a $444 value goal. The inventory has gained 0.4% to $253.49 on Monday morning. Bitcoin has dipped 0.1% to $46,981.

Write to Ben Levisohn at [email protected]

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