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H.C. Wainwright believes that the crypto winter is over and has called for a buy on Coinbase (NASDAQ: COIN) stock. According to the New York-based investment bank, Coinbase stands to benefit from global digital asset economy growth sooner rather than later. H.C. Wainwright released a statement on Wednesday that underscored its bullishness on the prices of crypto assets.
The investment banking platform wrote:
“Crypto asset prices have rallied 45% YTD, supported by a 67% increase in BTC prices, indicating to us that crypto winter is over and that we have likely now entered BTC’s next bull price cycle (not baked into current estimates), which has historically resulted in significant growth in total crypto market cap, incremental retail, and institutional adoption, and higher crypto trading volumes.”
Summing up these key metrics as a driver of Coinbase’s operating results, including transaction revenues, H.C. Wainwright also said:
“[As a leading exchange in the US and the world], we believe Coinbase is uniquely positioned to benefit from the large and rapidly growing global crypto economy given its trusted brand, easy-to-use products, and focus on compliance and regulation, and we expect the company to gain market share in 2023.”
According to the bank, Coinbase’s revenues would become more “durable” over time due to its increasingly alternate revenue sources. Besides generating income from transaction-based fees, Coinbase has started leaning toward subscription and service revenues.
H.C. Wainwright analyst Mike Colonnese posted a ‘Buy’ rating for Coinbase, explaining that “rewards outweigh risks at these prices.” Furthermore, the analyst stated that COIN, currently trading at $54.17, is a “scarce asset” unlikely to change over the near term. Colonnese also pointed out that the major crypto exchange is the only US publicly-listed crypto company with a market cap exceeding $10 billion. As a result, the analyst concluded that competition for investor capital remains extremely limited.
Although the Nasdaq-listed COIN closed 3% lower on Wednesday and at 85% lower than its November 2021 peak, Wainwright analysts opine the stock is still an attractive prospect. These analysts say Coinbase’s share price levels offer investors an attractive entry point because the stock trades at a 35% discount to historical highs.
In other recent Coinbase news, the exchange sued the Securities and Exchange Commission (SEC) over crypto regulatory guideline differences. In its lawsuit, the American exchange asked the court to require crypto clarity from the securities regulator. Coinbase called for the SEC to respond to its July 2022 petition promptly. In the previous petition, the exchange suggested that the Commission propose and adopt more explicit regulatory guidelines for the US crypto space via its formal rulemaking process. More than 1,700 individuals and entities have since submitted comments on Coinbase’s petition, also calling for more regulatory clarity from the SEC.
Yesterday, Coinbase firmly responded to a Wells Notice from the SEC last month, claiming no violation of securities laws. The exchange’s chief legal officer Paul Grewal accused the regulator of refusing to engage in meaningful dialogue regarding crypto regulations. Furthermore, Coinbase also suggested that the SEC had been intimidating several other exchanges over securities law violations. However, Coinbase expressed its intent to remain unshaken as it has not committed any wrongdoings.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
A 35% pullback in Coinbase Global Inc over the past month is “overdone” and a recovery is coming soon, says Mike Colonnese – an H.C. Wainwright analyst.
On Wednesday, Colonnese recommended that investors buy shares of the world’s second-largest and one of the best cryptocurrency exchange as they had upside to $75 – a 35% premium on its current price.
The analyst is bullish on Coinbase stock for one simple reason that rewards currently outweigh the risks.
Coinbase is uniquely positioned to benefit from large and rapidly growing crypto economy given its trusted brand, easy to use products, and focus on compliance and regulation.
Coinbase has a footprint in 100 countries and is serving about 8.3 million active users, which, Colonnese wrote, is scale enough for it to expand its market share this year.
Coinbase is expected to report its Q1 results next week. Consensus is for it to lose $1.36 a share this quarter versus $1.98 per share a year ago.
The H.C. Wainwright analyst is convinced that the crypto winter is over and the subsequent increase in trading volume will be a catalyst for the company’s operating performance. His research note added:
COIN is a scarce asset, as the only publicly listed crypto native company in the U.S. with a market cap >$10B, which means competition for investor capital is extremely limited.
Earlier this week, Coinbase sued the Securities and Exchange Commission after waiting for months to get an answer on its July 2022 petition. Regulatory clarity in the future will also help drive the Coinbase stock up, Colonnese concluded.
Mining stocks are significantly better than direct exposure for investors wanting to fully benefit from a further potential increase in bitcoin prices.
Bitcoin investors were a happy lot last month as prices jumped nearly 40%. But Mike Colonnese says the gain was rather trivial compared to a whopping 124% increase on average in mining stocks.
More importantly, the analyst expects that outperformance to continue moving forward. His research note reads:
We expect improved mining economics, driven by higher BTC prices and moderating energy costs to drive upward estimate revisions for the group throughout 2023 and see continued multiple expansion for mining stocks.
Colonnese expects bitcoin prices to particularly celebrate once the U.S. Federal Reserve slams the breaks on raising rates and decides to pivot.
The H.C. Wainwright analyst also noted that mining stock continue to build on their gains even though bitcoin pared back a little over the past week.
Part of his bullish view on BTC miners is based also on their monthly production update. Three of them, in particular – Marathon Digital, CleanSpark, and Cipher Mining recently reported a sharp increase in the number of bitcoin they minted in January.
Consequently, Colonnese upgraded CIFR to “buy” this morning and said its shares could climb further to $3.0. That suggests about a 75% upside from here.
In January, Cipher Mining Inc improved its hash rate by roughly 48% versus the prior month. Colonnese dubbed it a “must-own” mining stock in his research note today.
Shares of DMG Blockchain Solutions Inc (CVE: DMGI) have already more than doubled this year but an H.C. Wainwright analyst is convinced the stock still has massive room to the upside.
On Thursday, Kevin Dede reiterated his “buy” rating on the blockchain firm. His C$1.0 price objective suggests another 200% upside from here.
The bullish call arrives only days after DMG Blockchain Solutions said a sharp increase in bitcoin mining saw its revenue more than quadruple in fiscal 2022 to C$43.2 million.
DMG closed out the fiscal year at 700 Ph/s up from 15 Ph/s at the end of fiscal 2021, while ending CY22 at 900 PH/s.
DMG Blockchain Solutions is currently pending delivery of Bitmain XP machines that, the analyst noted, will improve its hash rate by another 42 Ph/s.
Dede likes DMG also for its healthy profit margins. The cryptocurrency company mined 200 bitcoins in its fourth financial quarter at an average cost of about $10,000. The research note reads:
[DMG] is holding approximately C$10.3 million of cash and digital currencies, and little debt, but adding C$1M in December quarter, FY1Q23, merely testing the waters in consideration of funding its 2 Eh/s CY23 mining target.
Other reasons cited for reinforcing the bullish view included its commitment to significantly expanding its footprint in software and services that currently make up only 5.0% of its annual sales.
DMG’s Core+, the analyst concluded, positions it to easily navigate the growing regulations as well.
Bitcoin price may be stuck around $20,000 and miners in increasing pain as fear, uncertainty and doubt spike, but according to corporate investor HC Wainwright is Bitcoin is “alive and well.”
The rating company’s latest view of Bitcoin mining and the crypto space is that a bullish flip is inevitable, especially in an environment of positive money supply. In short, reports of the flagship cryptocurrency being dead, even amid the troubles around public mining firms, are ‘greatly exaggerated.’
In an industry update published 2 November, HC Wainwright’s Kevin Dede says rumblings over the future of Bitcoin have gone a notch higher since Ethereum’s merge.
These have also been accelerated by the increase in network hash rates to all-time highs above 280 EH/s over the past few weeks as price stagnated around $20,000 has not helped but fuel fear of miner capitulation and further pain in the market.
And amid all these are questions around bitcoin’s inflation-hedge worthiness, regulation and other many other exogenous factors.
HC Wainwright’s assessment is that the rising network hashrate is “a direct reflection of the confidence in crypto’s future powered by investments miners made mostly last year.”
As such, the investment banking provider expects the bitcoin mining industry will continue to feel the effects of the crypto winter. The pain could persist to the next halving and failing to plan operations with this scenario in mind would be sloppy.
So what next for BTC price and the bitcoin mining ecosystem? HC Wainwright offered what it believes constitutes a bullish outlook for the world’s largest cryptocurrency by market cap. One factor to watch is the Fed’s monetary policy.
“Our more bullish sentiment lies on the side of a moderation in the Fed’s tightening monetary policy. A normalized money supply may bring investors back to risk-on assets, a bucket into which the current bear market seems to have dumped crypto,” Dede wrote.