- Citi Analysts Tipped Coinbase’s COIN for a +30% Rally to $345
- They also cited increasing regulatory clarity in crypto as the key catalyst
Citigroup analysts upgraded Coinbase (COIN) stock to ‘BUY’. According to them, COIN could reach $345 on the charts, a potential 33% rally from its press time price of around $260.
The Citi analysts, led by Peter Christiansen, thought that the improving regulatory landscape around crypto is a key catalyst for the stated bullish outlook for COIN.
“Shifts in the U.S. election landscape and the Supreme Court’s overturning of the long-standing Chevron precedent have changed our view of Coinbase’s regulatory risks.”
Given the increasingly favorable crypto space from a regulatory perspective, Citi is now projecting an “upside opportunity” that could attract more institutional and retail capital to Coinbase and COIN.
“Potentially sidelined institutional capital, investments and more crypto-native and traditional financial collaboration.”
More catalysts for Coinbase
Aside from the likely regulatory easing risks, the analysts pointed to some crypto-native positive factors that could further strengthen Coinbase and its stock.
The basis of Coinbase, an Ethereum [ETH] L2 has seen tremendous traction. It is seen by Citi analysts as “customer engagement” that is ripe for long-term opportunities.
To maximize on this front, the analysts have called on Coinbase to focus on growing its Base market share to tap potential long-term opportunities. They also warned that increasing transaction fees could undermine active users and limit opportunities.
“The focus is on engagement, which can be measured by transactions and active users. Increasing transaction costs or failing to reduce them when the opportunity arises can create friction or give competitors a comparative advantage.”
Interestingly, the lack of a staking feature on recent US spot ETH ETFs was also seen as a positive catalyst. This applies to investors looking for ETH returns, forcing them to opt for the Coinbase exchange, thus increasing volumes. Part of the analysis stated:
“Investors who still want a proprietary return on ETH will still need to purchase these assets on digital asset exchanges (such as Coinbase) rather than within an ETF – this can support higher margin trading volumes versus a relatively small custody fee that would be earned from ETF inflows.”
According to Citi, retail ETH flows could be deployed directly into the Ethereum network. This would likely yield greater rewards than the ETF fees from retail flows.
Christiansen and his team believe that the only setback and negation of this bullish outlook for COIN would be the continuation of the current administration’s enforcement approach.
Meanwhile, COIN was up 63% on a YTD (year-to-date) basis at the time of writing. As compared to Bitcoins [BTC] 48% in the same period, COIN holders were better off with an additional 15% gain.
Source: COIN vs BTC Performance