Coinbase’s stock gains as JPMorgan abandons bearish call less than a month in

“[W]hat was initially a sell-the-news event with the launch of U.S. bitcoin spot ETFs, has now turned into meaningful bitcoin price appreciation,” Worthington wrote in an upgrade note Thursday. “In our opinion, we think this bitcoin appreciation is contributing to better spot bitcoin ETF flows, which is in turn driving bitcoin prices higher, and pulling other tokens higher as well.”

Worthington conceded that he “previously underestimated the strength of the U.S. spot Bitcoin ETFs in its early days — launched January 2024 — as a key catalyst for the crypto industry.” He noted that the upbeat trends have the potential to boost Coinbase’s earnings power.

“We are still not recommending the stock, but we do acknowledge the impact enthusiasm and consequently the activity and volumes that the U.S. spot bitcoin ETFs has injected into the [crypto ecosystem], pushing it out of its 2022 crypto winter.”

Read: Correlation between bitcoin and stock market may rise again. It’s all about ETFs.

At the same time, he wrote that he still sees “risks for Coinbase around ETF adoption potentially weighing on Coinbase account growth and ultimately pricing outcomes.” And the recent rally in Coinbase shares could make valuation “less accessible.”

Shares of Coinbase were up 6% in Thursday’s premarket trading. Through Wednesday’s close, they’d gained about 29% since the time of Worthington’s January downgrade.

The company is due to post fourth-quarter earnings after the close of trading Thursday.

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