(Bloomberg) — Cryptocurrency-related stocks fell on Thursday, reflecting early gains from the U.S. financial regulator’s approval of exchange-traded funds that invest directly in bitcoin.
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The landmark decision by the U.S. Securities and Exchange Commission on Wednesday was a game-changer for the roughly $1.7 trillion digital asset sector, expanding access to the largest cryptocurrency on Wall Street and beyond. The SEC’s decision allowed companies like BlackRock Inc. to take money. and Invesco Ltd. And smaller competitors like Valkyrie.
Shares in Coinbase Global Inc. and Robinhood Markets Inc. and Cleanspark Inc. miners. and Marathon Digital Holdings Inc. Among the stocks that fell on Thursday, erasing premarket gains after the broader market fell following a hotter-than-expected inflation report. Coinbase stock, the poster child for crypto stocks, fell 6.7% to close at around $141 per share, eroding its more than 250% gains over the past 12 months.
Read more: Why the Bitcoin ETF has been a long time coming: QuickTake
Now that SEC approval has been approved, industry watchers may be thinking about how much cryptocurrency-related stocks have soared after huge gains in 2023.
Dan Dolev, an analyst at Mizuho Securities USA LLC, wrote in a note that Coinbase’s potential upside may be “more muted than thought, with only 1-2% benefiting from custody fees and 5-10% of total benefits if… ETFs drive additional spot trading in Bitcoin.” . He has an Underperform rating and a $54 price target for the shares.
Read more: Why the Bitcoin ETF has been a long time coming: QuickTake
Christopher Allen of Citigroup Inc. expressed: He expressed similar sentiments in a note ahead of SEC approval as he opened a bearish 90-day trigger watch on Robinhood shares.
“The stock has been rising on better cryptocurrency activity, but the revenue contribution (5% of turns) is not material enough to warrant such a response in our view,” he wrote, maintaining his Neutral rating and $12.50 price target on shares.
Bitcoin pared its gains after surpassing $49,000 earlier on Thursday. The largest cryptocurrency by market cap jumped more than 160% last year in anticipation of regulatory approval and the prospect of looser monetary policy.
Of course, some analysts see upside for some companies. Analysts at Wedbush Securities Inc. Coinbase price target was boosted to $180 from $110 after SEC approval. The company is bound to benefit given its “dominant role in these ETFs,” analysts led by Moshe Katri wrote in a note dated Thursday.
Cryptocurrency stocks rose ahead of the SEC’s decision, although a false posting on the regulator’s X account that pre-empted the decision led to a temporary sell-off.
Still, the approval “represents an important milestone,” Deutsche Bank analysts Marion Laborie and Cassidy Ainsworth Grace wrote in a note Thursday. While the two analysts see bitcoin gaining ground throughout the year, they cautioned investors “not to confuse price gains with broader predictions of the cryptocurrency overtaking traditional finance,” according to the note.
“For now, the immediate approval of a Bitcoin ETF opens a new chapter for Bitcoin prices, although volatile conditions are likely to continue,” they said.
–With assistance from Alexandra Müller.
(Updates stock movements at market close.)
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