Coinbase (NASDAQ:COIN), the largest US crypto exchange, stands to gain as Bitcoin’s historic surge reshapes the crypto landscape.
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Bitcoin has soared past the $100,000 mark for the first time today, breaking a major psychological milestone and setting the crypto market ablaze with optimism.
The crypto space was already in a generally positive mood prior to the elections, but as Oppenheimer analyst Owen Lau notes, “sentiment and momentum for crypto has gone through the roof after Trump won the election and Republicans secured the majority of both House and Senate.”
While Trump’s opinion can flip faster than a pancake, he currently has a favorable stance toward crypto. Adding to the euphoria, SEC Chair and crypto critic Gary Gensler announced he would step down on Trump’s inauguration day, further energizing the market.
And now things have gotten even better. Trump has announced that he is picking former SEC commissioner Paul Atkins to lead the agency. And Atkins, in sharp contrast to Gensler, is a crypto fan.
So, with a “seismic regime shift” taking place, Lau thinks there could be some very positive implications for Coinbase.
“The chilling effect created by the SEC lawsuits against the widely perceived good actors such as Coinbase can’t be under-stated,” Lau, who ranks in the top 4% of Wall Street stock pros, said. “It had deterred new capital going into this space, and many developers had pivoted to other industries. But the industry has a chance to rebuild the reputation, and Coinbase is leading this new chapter.”
Lau anticipates a significant drop in enforcement actions targeting the industry. Even more crucially, Congress is likely to collaborate on developing and passing forward-thinking crypto legislation, such as the FIT21 market structure bill and a stablecoin bill.
The implication of this is that the crypto bills will “legitimize the industry.” Moreover, Trump has pledged to create a Strategic Bitcoin Stockpile/Reserves and a “bitcoin and crypto advisory council.” Reports also suggest the potential establishment of an official crypto role within the White House. “These moves will tremendously support capital formation and talent attraction to this space,” the 5-star analyst added.
Meanwhile, since the election, Coinbase trading volume has surged significantly, with ADV (average daily volume) rising to $6.5 billion since November 5th, compared to the year-to-date pre-election average of $2.4 billion. For Q4 2024, Lau now projects that spot trading volume will reach $350 billion, representing a 127% year-over-year growth.
With a positive outlook ahead, Lau has assigned an Outperform (Buy) rating to COIN shares, while his $358 price target implies the stock will add ~12% over the coming months. (To watch Lau’s track record, click here)
All in all, among the 18 recent analyst reviews on COIN, opinions are split: 8 Buys, 9 Holds, and 1 Sell, resulting in a Moderate Buy consensus. However, after a stellar 127% surge over the past year, the $275 average price target signals a potential 14% pullback in the stock’s value. Look out for analysts to either downgrade their ratings or boost their price targets shortly. (See Coinbase stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
