Bitcoin's drop boosts Coinbase and crypto stocks' buying opportunity
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The recent Bitcoin correction has rattled the market, but for savvy investors, it may present a window of opportunity. Since Inauguration Day, Bitcoin has plunged over 20% from its all-time high near $110,000, now trading around $87,000. This selloff has had a ripple effect across crypto-related stocks, with Coinbase Global and Robinhood Markets tumbling more than 20% and 24%, respectively, over the past five days. However, analysts suggest the downturn could be a temporary setback rather than a structural shift.
Despite the selloff, Coinbase and Robinhood have recently seen significant regulatory relief. The SEC has dropped its investigations into both firms, and with Paul Atkins, Trump’s nominee for SEC chair, widely viewed as a crypto-friendly regulator, the era of "regulation by enforcement" could be coming to an end. According to Oppenheimer analyst Owen Lau, this shift will benefit not just Coinbase but the entire crypto sector. He attributes Coinbase’s decline more to macroeconomic factors than company-specific weakness and maintains a bullish price target of $388—an 85% upside from current levels.
Other analysts are equally optimistic. Steven Nie of Daiwa Capital Markets sees even greater potential, setting a price target of $400 for Coinbase, emphasizing that its current valuation, at 28 times 2025 earnings estimates, is significantly below its five-year average. He notes that the company's Q1 guidance remains strong and that trading volumes have remained resilient despite the broader market pullback. If Bitcoin stabilizes, Coinbase is expected to rebound alongside it, while Robinhood, a more diversified brokerage, could also benefit.
Beyond exchanges, the crypto mining sector has also suffered heavy losses. Top miners such as Riot Platforms, MARA Holdings, Core Scientific, and CleanSpark have seen their stocks plummet this year. However, Cantor Fitzgerald analyst Brett Knoblauch remains optimistic, maintaining an Overweight rating on all four stocks. He expects Bitcoin’s bull cycle to extend another 12 to 16 months, supporting elevated mining revenues. The stocks currently trade at modest enterprise value-to-EBITDA multiples, making them attractive based on expectations for strong revenue and earnings growth.
Moreover, Bitcoin miners are evolving beyond just crypto. Increasingly, they are leveraging their high-performance computing infrastructure to support artificial intelligence data centers. With their advanced cooling systems and access to cheap, large-scale energy sources, miners are well-positioned to capitalize on the rising demand for AI computing power. Prakash Vijayan of Driehaus Capital Management highlights this trend, suggesting that mining firms could see additional revenue streams from this transition.
While crypto stocks remain volatile and will continue to mirror Bitcoin’s price swings, the overall outlook appears more constructive. Unlike MicroStrategy, which is heavily tied to Bitcoin’s price due to its direct holdings, exchanges and miners offer exposure to the broader crypto ecosystem with slightly less risk. With regulatory clarity improving and the SEC now openly embracing Bitcoin, the longer-term trajectory for crypto stocks looks increasingly favorable. Investors seeking exposure to the sector may find the current downturn an opportune moment to enter.
Despite the selloff, Coinbase and Robinhood have recently seen significant regulatory relief. The SEC has dropped its investigations into both firms, and with Paul Atkins, Trump’s nominee for SEC chair, widely viewed as a crypto-friendly regulator, the era of "regulation by enforcement" could be coming to an end. According to Oppenheimer analyst Owen Lau, this shift will benefit not just Coinbase but the entire crypto sector. He attributes Coinbase’s decline more to macroeconomic factors than company-specific weakness and maintains a bullish price target of $388—an 85% upside from current levels.
Other analysts are equally optimistic. Steven Nie of Daiwa Capital Markets sees even greater potential, setting a price target of $400 for Coinbase, emphasizing that its current valuation, at 28 times 2025 earnings estimates, is significantly below its five-year average. He notes that the company's Q1 guidance remains strong and that trading volumes have remained resilient despite the broader market pullback. If Bitcoin stabilizes, Coinbase is expected to rebound alongside it, while Robinhood, a more diversified brokerage, could also benefit.
Beyond exchanges, the crypto mining sector has also suffered heavy losses. Top miners such as Riot Platforms, MARA Holdings, Core Scientific, and CleanSpark have seen their stocks plummet this year. However, Cantor Fitzgerald analyst Brett Knoblauch remains optimistic, maintaining an Overweight rating on all four stocks. He expects Bitcoin’s bull cycle to extend another 12 to 16 months, supporting elevated mining revenues. The stocks currently trade at modest enterprise value-to-EBITDA multiples, making them attractive based on expectations for strong revenue and earnings growth.
Moreover, Bitcoin miners are evolving beyond just crypto. Increasingly, they are leveraging their high-performance computing infrastructure to support artificial intelligence data centers. With their advanced cooling systems and access to cheap, large-scale energy sources, miners are well-positioned to capitalize on the rising demand for AI computing power. Prakash Vijayan of Driehaus Capital Management highlights this trend, suggesting that mining firms could see additional revenue streams from this transition.
While crypto stocks remain volatile and will continue to mirror Bitcoin’s price swings, the overall outlook appears more constructive. Unlike MicroStrategy, which is heavily tied to Bitcoin’s price due to its direct holdings, exchanges and miners offer exposure to the broader crypto ecosystem with slightly less risk. With regulatory clarity improving and the SEC now openly embracing Bitcoin, the longer-term trajectory for crypto stocks looks increasingly favorable. Investors seeking exposure to the sector may find the current downturn an opportune moment to enter.