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Mizuho analyst Dan Dolev weighed in on Coinbase (NASDAQ: COIN) with Bitcoin (BTC) trading almost 50% off the record highs. The cryptocurrency exchange’s business model is heavily reliant on retail crypto volatility.
A survey conducted by Mizuho shows 50% of users plan to hold rather than trade their Bitcoin. According to Dolev, this may signal lower volatility in the coming months.
“A potential hiatus in heightened trading activity is consistent with recent COIN volume data. Specifically, assessing COIN’s daily trailing 10-day average volumes shows they are currently trending 35-40% below peak levels,” the analyst said in a note.
“Our survey suggests more upward vs. downward pressure to Bitcoin price, albeit with limited near-term upside potential. On average, respondents see Bitcoin prices at $42K by December. 55% expect it to be below $40K. Only 5% see Bitcoin exceeding $100K. According to the survey, 32% plan to add more Bitcoin to their position. About 17% plan to sell their Bitcoin. In other words, the survey points to a positive up/down ratio spread of about 15% points in favor of buying.”
Moreover, the average cost basis for Bitcoin traders on COIN is about $21,000, with only 20% reporting cost basis above $30,000.
Dolev reiterated a “Neutral” rating on COIN and a $225.00 per share price target as he remains “cautious on the company’s near- to medium-term outlook.”
Shares of Coinbase closed over 20% lower in May. The price action is up 1.3% in pre-open Wednesday.