Coinbase Global (COIN) dropped over 6% following a rating downgrade by Erste Group’s Hans Engel to Hold from Buy. The Top analyst cited pressure from its low-cost Bitcoin ETFs that could hurt profitability.
TipRanks Black Friday Sale
- Claim 60% off TipRanks Premium for the data-backed insights and research tools you need to invest with confidence.
- Subscribe to TipRanks' Smart Investor Picks and see our data in action through our high-performing model portfolio - now also 60% off
Engel argued that while Coinbase remains a leading platform for both retail and institutional crypto trading and benefits from the growing popularity of cryptocurrencies, its revenue model faces growing challenges.
The rise of low-cost Bitcoin ETFs means fewer retail customers will trade directly on Coinbase. Instead, Coinbase will earn smaller fees from ETF providers, which have much lower margins.
Engel concluded that this shift would “significantly reduce profitability” for the exchange.
Coinbase’s Growth Push
To diversify beyond traditional crypto trading, Coinbase recently hired former Goldman Sachs (GS) partner Liz Martin to lead its markets and derivatives division, part of its plan to become an “Everything Exchange.” The company is expanding into derivatives, tokenized assets, and bridging traditional finance with blockchain markets.
Moreover, the company is reportedly teaming up with Kalshi, a prediction market platform, to provide custody and settlement services.
These growth efforts come as competition continues to rise. Firms such as BlackRock (BLK) and Fidelity are rolling out low-cost spot Bitcoin ETFs, offering investors an alternative way to gain exposure to Bitcoin. At the same time, volatility in crypto prices has cut trading volumes, leaving Coinbase stock vulnerable during market pullbacks.
Is COIN a Good Buy Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on COIN stock based on 15 Buys, six Holds, and one Sell assigned in the past three months. Further, the average Coinbase stock price target of $400.63 per share implies 67.89% upside potential.
