Coinbase to Face ‘Reality Check’ as Retail FOMO Is Fading, Mizuho Says

A rising bitcoin (BTC) price has generally driven up retail engagement, but fear-of-missing-out (FOMO) on the part of these investors appears to be fading, causing an unprecedented bifurcation between the BTC price and Coinbase (COIN) volumes, Mizuho Securities said in a research report on Tuesday.

“Trading volumes on COIN have historically tracked in tandem with changes in the price of bitcoin,” analysts led by Dan Dolev wrote. “Both peaked in 4Q21, for instance, when COIN volumes reached nearly $550 billion and the average price of bitcoin was greater than $55,000.”

Vitalik Buterin’s X Account Is Hacked; Altcoins Start…

Exploring the Value of Trump’s NFT Cards After he…

Ethereum’s Vitalik Buterin Outlines Way for Blockchain…

Bitcoin Could Reach $40K By End of Year: Analyst

DOJ Argues Sam Bankman-Fried’s Attempts to…

AzukiDAO Voting on Return of Nearly 20K…

Animoca Brands Raises $20M to Advance its Metaverse…

Crypto Liquidity Heavily Concentrated on Handful of…

The report said that starting in the first quarter of 2023, there is a “stark bifurcation between COIN volumes and the price of bitcoin.” The exchange’s volumes dropped from $145 billion to $92 billion by the second quarter and are heading towards around $80 billion for the third quarter. In the same period, bitcoin rose to an average price of $28,500.

Mizuho says this indicates potential fatigue among retail customers, and in contrast to previous cycles, fear-of-missing-out no longer “entices investors to trade bitcoin when prices rise,” as it did in prior years. “This could prove problematic for COIN, as it generates around 95% of its transaction revenue from retail trades,” the note said, adding that the year-to-date rise in the shares is unsustainable. “We expect a reality check to follow.”

The investment bank has an underperform rating on Coinbase stock, with a price target of $27. Coinbase shares were trading at $82.49 at the time of publication. The stock has risen about 125% this year, while bitcoin climbed nearly 60%.

Recommended for you:

• Animoca Brands Raises $20M for Metaverse Project Mocaverse
• DOJ ‘Overreaching’ in Trying to Block Sam Bankman-Fried’s Proposed Witnesses, Defense Says
• First Mover Americas: Altcoin Crash May Be on the Cards

Read more: Coinbase Bears Doubt Stock Can Rise Even After Exchange Beats Estimates

Edited by Aoyon Ashraf.

Newsletter Every Thursday

Sign up for Crypto for Advisors, our weekly newsletter defining crypto, digital assets and the future of finance.

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Will Canny is CoinDesk’s finance reporter.