Crypto Winter Persists: Berenberg Reports Slowed Coinbase Trading Volume

In the third quarter of this year, Coinbase, a significant player in the cryptocurrency exchange market, saw a more substantial decrease in its trading volumes within the U.S. than initially projected. As indicated by a research report from Berenberg, there was a sequential decline of roughly 17%, coupled with a year-on-year drop of about 52% in Coinbase's trading activity, a fact sourced from The Block. On November 2, the company is slated to disclose its financial results for the third quarter.

Berenberg has raised concerns about the potential decrease in Coinbase's consumer take rate due to heightened competition in the crypto space, characterized by lower trading volumes. The analysts, spearheaded by Mark Palmer, underscore that their cautious approach towards Coinbase Global primarily stems from worries about potential impacts on the company's operations due to various regulatory measures and legal proceedings in the U.S. They also foresee potential forthcoming challenges as regulatory scrutiny of the crypto industry persists.

The report particularly emphasizes that political obstacles might impede the efficacy of Coinbase's escalated lobbying endeavors. It also highlights that recent reports about entities like Hamas utilizing cryptocurrency are likely to further complicate the determination of cryptocurrencies' legal standing.

Despite the persistent challenges within the crypto market and the regulatory framework, Coinbase's shares are currently trading at a valuation closely aligned with their levels in late 2021, a period that marked the pinnacle of the previous crypto surge. The report underscores that, this year, the company's stock has experienced an increase of over 112%, surpassing the 72% gain for bitcoin (BTC) and the 29% rise for the Nasdaq stock index.

Berenberg has reiterated its hold rating on Coinbase stock and maintains a price target of $39. As of Tuesday, Coinbase shares concluded at $77.46.

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