Coinbase Survives the Crypto Winter with Over 100% Year-to-Date Growth

Zhitong App learned that the stock price of Coinbase (COIN.US) surged by 62% in November, highlighting Wall Street's optimism towards the largest cryptocurrency exchange in the United States. Amidst the shadow of FTX's Sam Bankman-Fried being convicted of fraud and the exposure of Binance's scandal, traders rushed to buy Coinbase's stocks, hoping that it would gain a significant amount of business, especially if the relevant authorities approve the trading of Bitcoin exchange-traded funds (ETFs).

This has led to the stock doubling in growth in 2023, and the increase in November has added $12 billion to the company's market value. The November surge is the largest since January, pushing the stock price above $120, with an average analyst target price of around $84.

John Todaro, an analyst at Needham & Co., said, "As a publicly traded company, Coinbase is currently in a better position than ever before." He added that 2022 and 2023 are "consolidation years" for the industry. "The companies that survive will become stronger. And Coinbase is one of the surviving companies."

Coinbase's stock price has more than doubled this year.

Due to the clarity brought by the legal liquidation of competitors, Coinbase's momentum has been strengthening this year. The U.S. Securities and Exchange Commission (SEC) is also gradually giving the green light to Bitcoin ETFs listed in the United States, with Bloomberg Intelligence predicting that such products could be approved as early as January next year. So far, Bitcoin has surged nearly 130% in 2023, with a growth of about 9% in November.

For traders, these are optimistic reasons, especially after the company has incurred losses for seven consecutive quarters. In contrast, according to data from S3 Partners LLC, investors who shorted Coinbase's stocks have accumulated a total loss of $1.3 billion in the past 30 days.

Earlier this month, a New York jury found Bankman-Fried involved in a massive fraud related to the collapse of the cryptocurrency exchange FTX. Last week, Binance settled a major dispute with the U.S. Department of Justice, agreeing to pay a $4.3 billion fine, while CEO Zhao Changpeng resigned.

However, Owen Lau, an analyst at Oppenheimer, stated that it is reassuring that Binance can continue to operate, eliminating the threat to cryptocurrencies and bringing positive benefits to Coinbase. In his recent report, he wrote, "The healthy development of the industry is beneficial to Coinbase, while the sudden withdrawal of large enterprises is not." "Binance's settlement with US authorities may maintain high compliance standards for cryptocurrency exchanges and force major participants to invest in internal controls and improve disclosure."

The question now is whether the bulls can maintain their momentum. Data compiled by Bloomberg shows that over 40% of Wall Street analysts have given Coinbase a "hold" rating.

Documents show that Cathie Wood's Ark Investment Management LLC, also known as "Wood Sister," sold over 30,000 shares of Coinbase stock in the past month and over 1.5 million shares in the quarter ending September 30. Ark remains the fourth largest shareholder of Coinbase stock.

Todaro from Needham said, "I wouldn't be surprised if cryptocurrencies need a breather." He rates Coinbase as a "buy" with a target price of $120. "But overall, we are still in the early stages of a new bull market cycle."