Coinbase (COIN) shares have jumped more than 30% since June 15, following news that Blackrock (BLK) filed an application for a spot bitcoin (BTC) exchange-traded-fund (ETF), investment bank Berenberg said in a research report Thursday. We believe the surge in Coinbase’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 by the fact that the company was designated as the provider of custody for the fund, analysts led by Mark Palmer wrote.
Despite the recent surge in Coinbase’s stock, investors should be aware of the risks the company is facing that could trigger a reversal of the stock’s recent gains. The U.S. Securities and Exchange Commission (SEC) and a task force of 10 U.S. state regulators have both accused Coinbase of violating federal and state securities laws. Berenberg notes that the potential cease and desist orders on Coinbase’s staking rewards program are looming, and the SEC could still target the USD Coin (USDC) stablecoin as an unregistered security.
Investment bank Berenberg has a hold rating on the stock with a $39 price target. The shares closed at $72.43 on Thursday.