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Coinbase Gets Citi Upgrade on Cryptocurrency Regulatory Optimism
(Bloomberg) — Shares of Coinbase Global Inc. have soared this year, and the potential for further upside has prompted Citigroup to upgrade the stock.
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The cryptocurrency trading platform was upgraded from neutral to buy at Citi in a note Tuesday, as analyst Peter Christiansen said the possibility of a more favorable regulatory environment for the digital asset industry — and Coinbase in particular — has changed his view on the company.
“Changes in the U.S. electoral landscape and the Supreme Court’s reversal of long-standing Chevron precedent have changed our view of Coinbase’s regulatory risks,” Christiansen wrote. “We believe the upside opportunity from a more supportive regulatory environment is too significant to ignore.”
Coinbase shares have surged 48% this year, adding more than $21 billion to its market cap, rallying alongside other cryptocurrency-related companies as Bitcoin has surged.
Last year, the U.S. Securities and Exchange Commission filed a lawsuit against Coinbase, alleging violations of securities rules. Christiansen argues that the Supreme Court’s recent reversal of a legal doctrine known as Chevron, which had given federal regulators the power to interpret unclear laws, could give the cryptocurrency trading platform additional flexibility in its defense.
Additionally, the analyst said the results of the upcoming U.S. election are tilted in favor of the cryptocurrency industry. President Joe Biden’s tenure has led “many to conclude that the potential for pro-cryptocurrency legislation would be more effective under another administration,” he wrote, noting that former President Donald Trump is scheduled to speak at an upcoming Bitcoin conference.
Citi’s upgrade pushed the consensus recommendation of analysts tracked by Bloomberg to its most positive level in about two years. Meanwhile, the return potential (or the stock’s expected performance over the next 12 months, based on analysts’ target prices) is projected to decline slightly by 1.5%.
In contrast, Christiansen’s new price target of $345 indicates he thinks the stock could rise by about a third.
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