Times are tough for Coinbase and its COIN stock listed on the Nasdaq. The outlook is not good.
Coinbase (COIN) is suffering from the high volatility of the cryptocurrency market, of which it is a leading platform. This is according to Dan Dolev of Mizuho Securities, who claims that the stock will “pay” for the drop in bitcoin trading volumes.
According to this outlook, reported by Yahoo, when the third-quarter 2021 figures are released, Coinbase’s stock is likely to fall and investors will be disappointed and sell.
His estimate is that the stock will go as low as $210 (compared to the current $235 and compared to $225 in the previous forecast), a year-on-year decline of 11.24%.
If bitcoin trading volumes do not return to growth in the period between July and September, COIN will suffer, according to the analyst. The fact is that July’s trading volumes were very low, but this was due to the lateralization of the price of BTC, which remained caged in a range between $30,000 and $35,000, at least until a few days ago. It was only at the end of the month that BTC again broke through the $40,000 wall, drawing attention to itself once more.
There is an alternative solution. Dolev suggests that Coinbase should “diversify” its revenue to survive the coming crypto winter by monetizing on the other services offered by exchanges.
Legal issues for the stock of Coinbase (COIN)
The price of the stock is not Coinbase’s only problem. In fact, a class action lawsuit is about to be filed against the exchange, linked to the launch of COIN, which is listed on Nasdaq. There is time until 20 September to adhere to the legal action that is being carried out by the firm Bernstein Liebhard.
The lawyers intend to defend investors who have been harmed by the purchase of COIN stock.
According to reports, the launch was accompanied by a misleading prospectus. In addition, Coinbase is being blamed for the platform’s problems, which have affected the price of the stock, which has fallen during blocking periods.
This is what happened, for example, on 19 May 2021. That day coincided with a heavy drop in the price of bitcoin due to the announcement of the new ban from China. The high influx of users probably congested the network. Not only have exchange users been hurt at a time of high volatility in the crypto market, but also investors on the Nasdaq who have seen COIN drop by 10%.
In short, Coinbase will have to deal with more than a few headaches in the coming months in order to continue to maintain user and investor confidence.