Cryptocurrencies have faced a turbulent few days in anticipation of — and reaction to — the Securities and Exchange Commission finally approving trading in 11 new bitcoin exchange-traded funds in the United States. The newly launched ETFs herald good news for the cryptocurrency market, as they help bring legitimacy to an industry that has long been viewed with suspicion by regulators and institutional investors. ETFs will also ease the way for retail investors to trade cryptocurrencies, giving them the ability to buy and sell various coins through a traditional means they are already familiar with. But while attention has focused on the Bitcoin ETF race, other potential winners have also emerged, including Coinbase. After rising nearly 400% in 2023, shares of the cryptocurrency exchange were down 13% to start the new year through Wednesday, and were swinging between gains and losses on Thursday. Bitcoin rose more than 10%. COIN 1Y Mountain Coinbase 1-Year Stock Chart Pros & Cons “We view the Bitcoin ETF impact as having both positive and risk elements for Coinbase, but given Coinbase’s higher share price, we view the risks as more significant to shareholders,” the JPMorgan analyst wrote. Kenneth Worthington. Worthington added that Coinbase would likely benefit from being the preferred custodian of new ETFs, having already been tapped by 8 out of 11 funds. On the other hand, the analyst added that a particularly successful Bitcoin ETF may also serve as a competitor to Coinbase. This may erode platform volume and redirect potential clients, ultimately putting downward pressure on trading spreads and commissions. Wedbush, which has an outperform rating on Coinbase, raised its price target on the stock by 64%, to $180 from $110. This means Coinbase shares could rise approximately 19% from Wednesday’s close of $151.29. “We believe COIN’s future results are bound to benefit from SEC approvals of Bitcoin ETFs, given the Company’s dominant role in these ETFs, and the ETFs facilitating/unlocking increasing institutional investment in crypto assets (now less than 10 %), as well as recent legal action/“financial issues impacting COIN (re)Binance peers,” Wedbush analyst Moshe Katri wrote. In addition to generating revenue from custodial and administrative fees, Katri believes ETF approvals could benefit Coinbase by While giving the platform more retail and institutional investor clients, such as hedge funds. Immediately, Wedbush also expects a boost for Coinbase from recent increased trading activity. “We also expect P&L tailwinds from recent volatility in the December quarter (40%) in Crypto asset prices, in line with Q1/Y23 levels, driving the company’s trading volume mix favorably.” However, Mizuho analyst Dan Dolev believes that approval of Bitcoin ETFs will likely only lead to “a victory Too expensive” for Coinbase shares. “The potential upside to COIN revenue from a Bitcoin ETF may be lower than thought, with only 1-2% benefiting from custody fees and 5-10% total benefit if the ETFs pay additional Bitcoin spot trading,” Dolev wrote. “In addition, deeper unwinding of high-margin spot Bitcoin trading and/or loss of shares to brokers offering ETFs could offset future benefits.” Once the initial reaction is over, Dolev expects the coming quarters to show weakness in the fundamentals of Coinbase’s business, resulting in a “painful reality check” for the stock. Mizuho reiterated an Underperform rating on the exchange’s platform, with a price target of US$54, which equates to a 64% downside for the shares. “This (price target) is in the same ballpark as its stock market counterparts, but represents a discount to other high-growth fintechs due to expectations of price pressure over time,” Dolev wrote. — CNBC’s Michael Bloom contributed to this report.