On Monday, Compass Point, a financial research firm, provided insights into the latest developments in the cryptocurrency market. Bitcoin (BTC) and Ethereum (ETH) prices have remained relatively stable since the firm's last report, with Bitcoin recovering to near $43,000 after a dip below $40,000. This rebound is attributed to an influx of stablecoins to exchanges and a reduction in Bitcoin balances on these platforms, suggesting investors may be purchasing to hold for the long term.
Grayscale Bitcoin Trust (GBTC) experienced approximately $5.6 billion in outflows, which may have contributed to selling pressure, yet this trend appears to be slowing down. Interestingly, Bitcoin ETFs have collectively seen inflows of around $1.5 billion. BlackRock (NYSE:BLK)'s Bitcoin Trust (IBIT) in particular reported higher volumes compared to GBTC.
Bitcoin miners' stocks have shown little movement or declined due to a drop in hash price, which is affected by lower transaction fees and an increase in the hash rate. Additionally, the upcoming halving event, which reduces the reward for mining new blocks, is being factored into their prices. Despite these challenges, Compass Point maintains a positive outlook on Core Scientific (NASDAQ:CORZ), considering the stock to be significantly undervalued at 1.25x EV/EBITDA based on their CY25 estimates. The firm expects Core Scientific to recover from the initial selling pressure post-bankruptcy.
Coinbase (NASDAQ:COIN) also received a favorable assessment, with a "Buy" rating and a price target of $200. Compass Point believes that concerns regarding Coinbase losing market share due to the emergence of ETFs are exaggerated. The firm notes that Coinbase has gained market share through January, with average daily volumes exceeding both their own and consensus estimates. The increase in the market cap of USD Coin (USDC), which is up roughly 10% year-to-date, is seen as a positive sign for Coinbase's interest income.
Looking ahead, Compass Point anticipates the cryptocurrency market to move sideways or slightly higher in the coming weeks before potentially resuming an upward trend in CY24. The firm also suggests that any perceived weaknesses in U.S. banks could benefit Bitcoin prices, drawing a parallel to market dynamics observed in March 2023.
InvestingPro Insights
As Coinbase (NASDAQ:COIN) garners a "Buy" rating from Compass Point with a price target of $200, current InvestingPro data and tips provide additional context to investors considering the stock. According to real-time metrics, Coinbase has a market capitalization of $30.85 billion. Despite the company's significant presence in the market, the data reflects that Coinbase is currently trading at a high Price / Book multiple of 5.21, indicating that the stock may be priced richly in relation to the company’s net assets. Moreover, the company has not been profitable over the last twelve months, with a negative P/E ratio of -40.96, adjusted to -25.69 in the last twelve months as of Q3 2023.
InvestingPro Tips highlight that Coinbase's stock price movements have been quite volatile, with a substantial 52.42% return over the last three months and a 42.6% uptick over the last six months, yet it has fared poorly over the last month with a -17.8% return. These fluctuations underscore the stock's unpredictable nature in the short term. Additionally, analysts do not anticipate the company will be profitable this year, which may be a critical consideration for investors seeking near-term returns.
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