Cowen downgrades Coinbase to market perform

• Cowen cited the absence of clarity on a possible trading volume recovery after FTX collapsed 
• Cowen also reduced its price target on the shares
• Coinbase has features that make it one of the safest platforms to trade

Financial services and investment firm Cowen, which has locations throughout the US, Europe, and several in Asia, downgraded cryptocurrency exchange Coinbase shares from outperform to market perform. 

They cited the absence of clarity on a possible trading volume recovery after competing crypto exchange FTX collapsed, CNBC reported. 

Shares dropped to $37 in premarket session

Cowen also reduced its price target on the shares from $75 to $36, almost 50%. In the premarket session, the stock lost 1.5%, falling to $37.14. Coinbase shares lost 84% last year. 

Positive predictions despite current developments 

How Coinbase will perform in 2023 remains to be seen. According to experts, however, the regulated company has an excellent security record and disposes of a number of features that make it one of the safest platforms to trade, buy, and sell crypto. 

Sterner scrutiny from regulators 

The collapse of Sam Bankman-Fried’s exchange sent shock waves throughout the industry. One effect is likely to involve sterner scrutiny from watchdogs like the US Securities and Exchange Commission according to insiders. 

Reduced crypto valuations will lead to lower retail trade volumes 

Lowered crypto valuations will result in depressed retail trading activity. There is still some interest from institutional investors, but they are becoming far more cautious, conducting careful due diligence in each sector. Analysts George Kuhle and Stephen Glagola wrote in a note: 

COIN’s business is significantly correlated to crypto asset prices, trading volumes and volatility.

Visibility remains low 

The leading US exchange’s monthly trading volumes have been declining fairly consistently each month since the universal all-time high in November 2021. 

Visibility remains low into a rebound and a stabilization in retail trading volumes in the current year considering the FTX contagion risks, the macroeconomic backdrop, and their compounded effects on crypto prices.