Barclays downgraded Coinbase Global ( NASDAQ: COIN ) to Underweight from Equal Weight following a recent runup in shares. At the same time, trading volumes and USCoin ( USDC-USD ) market cap are depressed and regulatory pressures cloud its outlook. The downgrade comes a day after Atlantic Equities cut its rating on the cryptocurrency exchange to Neutral after the stock surged 60% from recent lows. Coinbase ( COIN ) shares dropped 1.2% in Thursday premarket trading. "While we continue to believe Coinbase ( COIN ) is a likely longer-term winner in the broader crypto ecosystem, fundamentals remain challenged, and recent relief from price actions, increasing rates, and cost rationalization likely have little further to run," Barclays analyst Benjamin Budish wrote in a note to clients. He noted that Q2 volumes were down 36% from Q1 and July metrics are trading worse M/M and that "regulatory overhang is likely to last for some time." In addition, competition could be ramping up as some TradFi-backed exchanges and others step into the sector. The downgrade came after Coinbase ( COIN ) shares climbed after the announcement of a BlackRock ( BLK )-sponsored spot bitcoin ETF, for which Coinbase is expected to be the custodian and prime broker. "We do not think this accurately reflects the potential eventual P&L impact that could accrue to Coinbase," said Budish, adding that he thinks the rally was overdone. With the downgrade, his view on Coinbase ( COIN ) is more bearish than the SA Quant rating , average SA Analyst rating , and average Wall Street rating , all at Hold. More on Coinbase: Coinbase adds instant messaging feature to crypto wallet Cathie Wood's ARK Innovation takes some profit on Coinbase stock surge Coinbase Global: An Anti-Cyclical Bet on the Crypto Market Coinbase: An Opportunity to Take Advantage of Volatility
