Coinbase shares threatened by crypto legal uncertainty?

The note from title from the American Coinbase has been downgraded by Piper Sandler. The consequence ofregulatory uncertainty and also of theunpredictability of revenues of the stock exchange from cryptocurrencies.

Coinbase is going through some turbulence. To say so is an understatement. Its share price, COINThe stock market, therefore, is in a state of flux, caught between opposing winds. The SEC’s complaint against the exchange raises uncertainties.

At the same time, Coinbase’s participation in multiple Bitcoin ETF projects with traditional finance references benefits its stock market valuation. However, this has not prevented the stock from being downgraded, as reported by Bloomberg.

Volume and users expected to be at their lowest

Coinbase suffers fromuncertainty. And for a Piper Sandlerthis uncertainty is such that it would simply be impossible to predict revenues from the U.S. stock market, first in its home market.

This context of great uncertainty could persist. The tug-of-war between the firm and the financial regulator, the SECconcerning the regulation of crypto looks set to be a long one. This creates “too much uncertainty to allow a cautious projection of revenues in the coming years”, judges analyst Patrick Moley.

For this reason, he has decided to lower his recommendation from neutral to overweight. The analyst expects Q2 trading volumes and monthly user numbers to be at their lowest in over two years.

Kaiko has already confirmed this forecast. Spot trading volumes fell considerably over the period. They now rival 2020 trading levels. With its substantial market share, Binance weighed heavily on the balance sheet for the quarter.

The uncertain future of Bitcoin spot ETFs

The exchange alone has seen its volumes plummet by almost 70%. The world’s leading exchange is not an isolated case. In fact, trading volumes on Coinbase, Kraken and OKX also fell by more than 50% in Q2.

Yet the price ofCoinbase share more than doubled this year, measuring Bloomberg. Piper Sandler explains this dynamic by two factors: the recovery of the rise in cryptocurrency prices and an influx of filings for Cash ETFs on Bitcoin.

Coinbase’s share price remains fragile. Rising digital asset prices have not translated into increased transaction volumes in recent quarters, warns the analyst.

Approval of a Bitcoin ETF still pending uncertain. According to the WSJthe U.S. regulator said that recent applications for these traded funds were “not sufficiently clear and complete”. BlackRock’s CEO nevertheless seems fairly confident.

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