© Reuters
As the cryptocurrency market attempts to rebound from a steep drop in recent days, Wall Street analysts are discussing the implication of FTX’s collapse on publicly traded companies with high exposure to the digital asset market.
Coinbase (NASDAQ:), the largest publicly traded cryptocurrency exchange, saw its shares plunge more than 20% this week after analysts said the collapse of FTX presented a “major red flag” for the activities of the company.
However, Bank of America analysts said the situation around FTX is actually proof that Coinbase’s simple yet effective approach to risk management works. They also see an opportunity for the company to increase its market share, as one of its biggest competitors is eliminated.
“The FTX event may increase the likelihood of more restrictive regulations for digital asset trading platforms and could drive digital asset trading volumes, which contributed 64% of Coinbase’s third-quarter revenue. to decelerate in the short term,” the analysts wrote in a note.
Citi analysts lowered the price target to $80 per share from $105 previously to reflect lower crypto prices. According to analysts, it is now clearer than ever that the growing pains of the cryptocurrency industry remain a major concern for investors, consumers and market participants.
“We believe this event increases the sense of urgency for legislative action, which likely helps level the playing field, encourages increased institutional adoption, and perhaps establishes the legitimacy of trust-driven actors. sustainability, regardless of the cryptocurrency season,” the analysts said.
By Senad Karaahmetovic