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The analysts note that the price of Coinbase shares has jumped 31% since June 15, when BlackRock (NYSE:BLK) filed an application with the SEC for a spot Bitcoin exchange-traded fund.
“We believe the surge in COIN’s share price was driven not only by the positive change in sentiment toward bitcoin and cryptocurrencies resulting from the prospect of the world’s largest asset manager playing a prominent role in the space but also the fact that the company was designated as the provider of custody for the fund,” said the analysts.
“However, investors looking at COIN as a play on increasing engagement by institutions with the digital asset ecosystem should first consider the risks the company is facing that could give rise to negative headlines and trigger a reversal of the stock’s recent gains,” they added.
They also pointed to the fact that the downside from the potential loss of staking revenue appears much larger than the potential upside from the custody role for the BlackRock ETF.
