Wells Fargo calls out a bearish sentiment on Coinbase’s shareholders upon a declaration that the listed cryptocurrency exchange will face challenging and harsh economic environments in the future.
The DoomsDay Prediction
Wells Fargo, a banking, investment, and mortgage financial institution, makes a bearish bet on Coinbase, an online digital asset exchange. The banking and mortgage service provider stated that Coinbase would not be in a position to keep up with the stiff competition posted by similar entities offering the same service. The centralized financial institution also added that the stiff competition and underlying macroeconomic conditions would plummet the stock price towards rock bottom.
Wells Fargo’s Shocking Discovery
Wells Fargo scrutinized the digital asset exchange on Thursday, 29th September, concluding that the cryptocurrency exchange stock price will re-root to an underweight selling price of $57 per share. This scrutiny meant that the overall share price fluctuation would raid liquidity to new lows of more than 15% from where the market closed on Wednesday.
At the time of this publication, the current stock price of Coinbase is settling in range bound price action between $67.6 and $67.1.
Are Coinbase’s Reinforcing Pillars Crumbling?
The company has plummeted more than 73% since the year 2022 began. The underlying bearish market sentiment that stormed the market since the beginning of 2022 is partially to blame for the plummeting stock price. Coinbase’s good moments are observed during a bullish crypto market sentiment. The 2022 market crash being the worst cryptocurrency crash in history, Coinbase has frantically struggled to survive as trading commissions on the exchange reduced significantly.
The Underlying Hazards to Coinbase’s Existence
Wells Fargo hawks the rise of Binance and FTX as the main competitors of Coinbase. Binance and FTX seem to be doing better, even in the ongoing uncertainty in the crypto market.
Recently, these two exchanges raised the highest bids on Voyager Digital’s auction upon Voyager’s chapter 11 bankruptcy filing. Binance’s last reported bid to acquire Voyager’s digital assets stood at 50 million dollars. Finally, Voyager settled on Billionaire Sam Bankman-Fried’s FTX’s bid, a solid 1.422-billion-dollar acquisition.
Coinbase also participated in the auction at the initial stages. However, the exchange later pulled out of the deal, possibly due to financial challenges and competitive bidding from other financial institutions.
Other underlying factors listed by Wells Fargo that could potentially derail the crypto exchange include a considerable potential of increased government sanctions and regulations against the mainstream adoption of cryptocurrency and blockchain technology.
The anti-DeFi administrators have shown signs of wreaking havoc through cryptocurrency exchanges’ sanctions. According to Wells Fargo, Coinbase may not survive if the crackdown is successful.
“Though we believe in the value of COIN’s platform, we see its early-mover advantages gradually being eroded as the competition increasingly mimics the COIN ecosystem,” analyst Jeff Cantwell wrote in a Thursday note about Coinbase financial constraints.
A Gloomy Future For Coinbase
Coinbase has also recently shown signs of struggling. To minimize entity expenditure, the cryptocurrency exchange laid off 1,100 employees. The digital market exchange cited harsh economic conditions and limited growth over the last twelve months as the main course of restructuring.
Coinbase’s future may be bright because the exchange entered the crypto space earlier than the existing competitors. The crypto entity has also gained strong brand recognition among crypto fans as well as an enormous and sizable user base. Will Coinbase survive?