Tech
Coinbase Will Benefit from Long-Term Adoption of Blockchain Technology: Oppenheimer
Coinbase (COIN) is well positioned to benefit from the long-term adoption of blockchain technology, broker Oppenheimer said in a research report on Wednesday, raising its earnings estimates for the cryptocurrency exchange.
“We estimate COIN trading volume in 1Q24 will increase 95% quarter-over-quarter and 107% year-over-year to $300 billion,” analysts Owen Lau and Guru Sidaarth wrote, noting that “adoption of digital assets continued afterwards approval of spot bitcoins (BTC) exchange-traded funds (ETFs) in January.”
“More importantly, liquidity in this space has continued to increase, with the average market capitalization of USD Coin (USDC) rising 12% quarter-over-quarter to $28 billion (or $31 billion at the end of the first quarter of 24),” the authors wrote. USDC It is a stablecoin issued by Circle, which is itself supported by Coinbase. The exchange earns gross interest on outstanding USDC balances.
Considering the company’s improving outlook, the brokerage increased the target price of the stock to $276 from $200. At the time of publication, Coinbase shares were trading 2.5% higher at $258.
Oppenheimer notes that the stock is up more than 100% since January versus a paltry 6% gain for the S&P 500. “At this level of trading, we are cautious about near-term volatility, but remain positive on adoption long-term view of blockchain technology.”
However, there are some potential headwinds. While the stock may have strong momentum behind it, there are risks that investors need to be aware of, the report said. The broker previously expected the approval of a spot ether (ETH) The ETF in May, but now says there is a low probability of that happening.