Crypto investors witnessed a significant drop in Bitcoin‘s price from around $49,000 to $38,500 in the first month of the new year. Oppenheimer analyst Owen Lau warned of potential short-term volatility for Coinbase shares due to ongoing litigation with the SEC and expectations of further declines in Bitcoin’s price. Lau indicated that the legal uncertainties surrounding Coinbase’s ongoing case with the SEC over alleged securities law violations could lead to notable fluctuations in the company’s stock, currently valued at around $125.
Bloomberg analyst Elliot Stein recently expressed optimism that Coinbase could emerge victorious from the SEC lawsuit, estimating a 70% chance of the exchange coming out unscathed. Despite a recent 28% drop in Coinbase shares over the past 30 days, it’s important to note that the stock has risen approximately 67% in the last three months.
Short-Term Bitcoin Price Volatility Also Anticipated
Lau attributes the overall rise in Coinbase shares to increased optimism following the SEC’s approval of a spot Bitcoin ETF on January 10th, which coincided with a subsequent 20% drop in Bitcoin’s price over the following two weeks. Despite this decline, the largest cryptocurrency managed to recover significantly from its losses.
Moreover, Lau also cautioned about potential large swings in Bitcoin’s price in the short term, suggesting that the leading cryptocurrency could experience similar volatility to Coinbase shares until the next upward catalyst emerges. Additionally, JPMorgan cited the decline in Bitcoin’s price as a reason for downgrading its view on Coinbase shares, linking the performance of spot Bitcoin ETFs to the fortunes of the crypto exchange.