Bank of America downgrades Coinbase, says FTX collapse raises 'contagion risk' for crypto platform

Bank of America says the collapse of FTX is clouding the outlook for Coinbase . Analyst Jason Kupferberg downgraded shares of Coinbase to neutral from buy, citing "contagion risk" for the cryptocurrency exchange platform, even if it is not "another FTX." "We think Coinbase likely faces a number of new headwinds over the near/medium-term due to the recent collapse of rival crypto exchange FTX," Kupferberg wrote in a Friday note.

"With a large competitor eliminated, and with COIN reiterating its focus on regulatory compliance and the safety of customer assets, we think COIN may be able to gain market share over the long-term. However, diminished confidence in the crypto ecosystem is likely to dampen overall trading activity," read the note. Second, while traders were expecting some regulatory clarity around cryptocurrencies next year, that clarity may have been pushed back for now, the analyst said.

Why wasn't it downgraded a long time ago?

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What FTX's Collapse Means for CoinbaseShares of Coinbase skyrocketed over the past week since rival crypto exchange FTX filed for bankruptcy. Cathie Wood's ARK Investment Management ETF bought 238,000 more shares worth roughly $12.1 million. Oppenheimer Senior Analyst Owen Lau discusses the FTX collapse and whether it could be a positive development for Coinbase. Oppenheimer coinbase FTX_Official Going to $0.00. Oppenheimer coinbase FTX_Official I think that second section was more key than the first. It’s not Coinbase they are bearish on, but the market in general, which will reduce CB’s profits short term.
Source: CoinDesk - 🏆 291. / 63 Read more »