Analysts are sounding alarms as major investment firms downgrade forecasts for Coinbase and other crypto platforms ahead of first-quarter earnings, citing a significant decline in trading activity and token prices. Barclays has taken the most aggressive stance, downgrading Coinbase and warning of a profitability squeeze, with trading volumes dropping to their lowest levels since late 2023. Oppenheimer also revised its estimates downward, reflecting the broader trend of weakening trading volumes and declining crypto prices, which have seen Bitcoin and Ether lose over 22% and 29% of their value, respectively.
This downturn is critical for the financial markets, as it directly impacts revenue streams for exchanges reliant on transaction fees. With trading volumes estimated to have fallen by approximately 30% from the previous quarter, analysts are adjusting their models to account for this slowdown. The anticipated earnings reports will likely reflect these adjustments, with expectations for Coinbase’s adjusted EBITDA now about 24% below consensus estimates.
Market professionals should prepare for a potentially disappointing earnings season as firms like Coinbase and others report results. The proactive downgrades signal a cautious sentiment in the crypto sector, emphasizing the need for traders and investors to reassess their positions in light of declining trading activity and profitability challenges.
Source: coindesk.com