One of Europe’s major banks, Berenberg, has reported in a recent research paper that the cryptocurrency exchange Coinbase‘s trading volume in the US has dropped more than expected in the third quarter. The report emphasizes that the expectation of a decline in Coinbase shares is maintained.
Emphasis on the Problems Coinbase Faces
Referring to The Block in the Berenberg report, it states that the US-based cryptocurrency exchange Coinbase’s trading volume has dropped by approximately 17% and 52% on a quarterly and annual basis, respectively. Coinbase will announce its official third-quarter results on November 2. The bank stated, “We continue to see a risk of decline in Coinbase’s consumer buying rate due to competition for market share in a lower-volume cryptocurrency market.”
Berenberg analysts, led by Mark Palmer, stated, “The main reason for our cautious stance on Coinbase Global is not our concern about the company’s operational performance over the next few quarters, but rather the various regulatory pressures and lawsuits it faces in the US, as well as other threats it may face if regulatory pressure on the cryptocurrency market continues.”
The report indicates that political developments could reduce the impact of the cryptocurrency exchange’s increasing lobbying efforts and also highlights the recent news about Hamas and its use of cryptocurrencies, which could further complicate the legal status of cryptocurrencies.
$39 Target for Coinbase Shares
Despite the ongoing crypto winter and various regulatory challenges faced by Coinbase, the report points out that the cryptocurrency exchange’s shares are trading near record levels at the end of 2021.
According to data, Coinbase’s shares have increased by over 112% since the beginning of the year, compared to a 72% increase in Bitcoin (BTC) and a 29% increase in the Nasdaq stock index. Berenberg reiterated its price target of $39 for Coinbase shares. Coinbase shares closed the October 17 trading session at $77.46.
