Coinbase, in contrast to the majority of crypto currency exchanges who participated in the FTX crisis, may be one of the few that will profit from the fall. The failure of FTX left an imprint on the entirety of the cryptocurrency ecosystem, taking down several businesses along with it. Many investors saw their funds go down the drain as businesses tallied their losses.
The repercussions highlighted issues about the cryptocurrency ecosystem's validity, safety, and protection. Analysts at Jefferies believe that Coinbase will eventually benefit from the loss of FTX, despite many cryptocurrency exchanges struggling in the midst of the crypto winter.
The analysts at Jefferies penned a note (1) in which they discussed how Coinbase continues to uphold its status as a premium brand. They refer to the cryptocurrency firm as an onshore organization that is regulated and has a good balance sheet.
The analysts feel that Coinbase should be able to maneuver through the industry-wide repercussions triggered by the bankruptcy of FTX due to the robust balance sheet that the company maintains. Despite this, they continued by saying that
"the immediate impact is decidedly negative with trading volumes facing incremental pressure."
FTX’s Loss in Coinbases’s Gain
In addition, the broker began the covering of the stock on Monday with a hold rating and a target price of $35 per share. The rating comes after Cowen on Thursday changed their recommendation for COIN from outperform to market perform.
Cowen believes that a lack of clarity around the possibility of a comeback in trade volumes following the incident with the FTX caused the downgrade. Coinbase's stock price increased by 15.6%, reaching $38.27 per share.
At the time of this writing, the cryptocurrency company's share price was down 0.18%, sitting at $38.20. The company's value has increased by 8.14 percent since the beginning of the year and by approximately 14 percent in the last five business days. The analyst wrote the following:
"We expect COIN to regain a portion of its share losses from the past two and a half years, but still see a steep climb to Street estimates in FY25," which we believe will include a bitcoin recovery to approximately 25,000 dollars.
When they discussed it, the analysts did not leave out the possibility that the market could suffer a loss at some point in the future. Following the collapse of the FTX, Jefferies predicted that Coinbase would face "acute pressure in the near term" as retail customers withdrew from the cryptocurrency market. Despite this, the corporation is financially strong enough to ride out any potential storm.
The memo also highlighted the fact that Coinbase, which is a reputable firm that is publicly listed and audited, offers an opportunity for the company to benefit from the fall of FTX. They went on to say that the leaving of FTX leaves Coinbase with fewer competitors and the opportunity to recapture market share.
"Over the past two years, there has been a downward trend in COIN's market share; nevertheless, we anticipate that some of these losses may be mitigated in the near future... "and over a longer horizon as Coin can re-establish its status as the de-facto on-ramp into crypto, should we see another up-cycle," experts noted. "and over a longer horizon as Coin can re-establish its status as the de-facto on-ramp into crypto."