In a note to clients Monday, Mizuho maintained an Underperform rating and $60 price target on Coinbase (NASDAQ:COIN), questioning whether the Bitcoin ETF is emerging as a double whammy for the cryptocurrency exchange.
"The big hope for Coinbase heading into 2024 was that more Bitcoin ETF AUM would drive increased spot trading," said analysts.
However, they explained that, in contrast, "outflows from ETFs where Coinbase is the custodian exceed inflows (i.e. -$6bn outflows from GBTC since January 11th vs. +$4.9bn estimated inflows to other seven ETFs that Coinbase custodies)."
In addition, they noted that "spot volumes on Coinbase have abated following the initial excitement surrounding the ETF launch (i.e. $1.9bn ADTV since January 13th vs. $2.5bn in the 30 days leading up to the launch)."
Due to the large discrepancy between retail trading fees and what Mizuho believes Coinbase earns for ETF custody, they expected the launch of the ETFs to put additional downward pressure on industry pricing. Analysts said that this moment appears to be nearing with the recent pricing changes at Coinbase.