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Crypto currency investors saw the price of Bitcoin (BTC) fall from around $49,000 to $38,500 in the first month of the new year. Investment bank Oppenheimer’s analyst Owen Lau warned that the shares of the giant crypto currency exchange Coinbase could face high volatility in the short term due to the ongoing lawsuit with the U.S. securities regulator SEC and the expectation of further declines in Bitcoin’s price.
High Volatility Forecast for Coinbase Shares
Oppenheimer analyst Owen Lau, in a recent interview with Yahoo Finance, stated that the ongoing legal uncertainty in the lawsuit filed against Coinbase by the U.S. Securities and Exchange Commission (SEC) for allegedly violating securities laws could mean that Coinbase shares, currently at the $125 level, may face significant fluctuations in the short term. Lau said, “There are still regulatory issues and there is no clear legal regulation in the U.S. at the moment.”
Bloomberg’s lawsuit analyst Elliot Stein recently expressed an optimistic view that Coinbase could emerge victorious in the lawsuit filed by the U.S. regulator and suggested that the crypto currency exchange has a 70% chance of emerging unscathed from the legal process.
The high volatility predicted by Lau for Coinbase shares comes on top of a roughly 28% drop in the last 30 days. However, it is worth noting that Coinbase shares have risen by approximately 67% in the last three months.
Lau attributed the overall rise in Coinbase shares to increased optimism following the SEC‘s approval of a spot Bitcoin ETF on January 10, and linked it to the expectation of Bitcoin’s price rising towards the end of 2023. It is known that Bitcoin’s price fell by about 20% in the two weeks following the approval of the spot ETF. Following this drop, the largest crypto currency managed to recover a significant part of its losses.
Short-Term Bitcoin Price Volatility Also Anticipated
On the other hand, Lau also issued a warning for significant volatility in the price of Bitcoin. Lau predicted that in the short term, the largest crypto currency could fluctuate similarly to Coinbase shares, stating, “I think there will be some downward momentum on Bitcoin until the next rise catalyst emerges in the short term.”
On January 23, the U.S. investment banking giant JPMorgan indicated in a note to investors that the drop in Bitcoin’s price would affect spot Bitcoin ETFs and consequently downgraded the rating of the crypto currency exchange Coinbase.
