Broker Oppenheimer increased its earnings projections for Coinbase (COIN) on Wednesday and stated in a research study that the cryptocurrency exchange is well-positioned to profit from the long-term adoption of blockchain technology.
“We estimate that COIN’s 1Q24 trading volume would be up 95% quarter-on-quarter and 107% year-on-year to $300B,” analysts Owen Lau and Guru Sidaarth wrote, noting that the “adoption of digital assets continued after the approval of spot bitcoin (BTC) exchange-traded funds (ETFs) in January.”
“More importantly, liquidity in this space has continued to increase, with the average market cap of USD Coin (USDC) increasing 12% quarter-on-quarter to $28b (or $31B at 1Q24-end),” the authors wrote.USD Cashis a stablecoin that Circle, which Coinbase supports, is issuing.On outstanding USDC balances, the exchange receives gross interest income.
With the company’s prospects looking better, the broker increased the price target for the stock from $200 to $276.At the time of publication, Coinbase shares were trading 2.5% higher at $255.
Oppenheimer points out that the stock has increased by over 100% since January, while the S&P 500 index has only increased by a pitiful 6%.“At this trading level, we remain optimistic about the long-term adoption of blockchain technology, but we are cautious about the near-term volatility.”
There are still some possible obstacles.According to the research, investors should be mindful of some dangers, even when the stock appears to be moving strongly.The broker now states there is little chance of a spot ether (ETH) ETF getting approved in May, contrary to what it had previously anticipated.Another cloud hanging over the stock is the ongoing legal dispute with the Securities and Exchange Commission (SEC).The report stated, “At this point, we think this case will be a drawn-out legal battle and that the Supreme Court will probably make the final decision.”