Is the Bitcoin rally not enough to boost Coinbase’s trading volume?

04/13/2023 12:51 • Daily Digest • 62 views

According to reports, Mizuho stated that investors’ expectations that the rise of the Bitcoin to $30000 will boost the trading volume of Coinbase (COIN. US) may face a difficult awakening. Analysts at the bank stated that Coinbase had an average daily trading volume of less than $1 billion in April, compared to $1.6 billion in March. The bank believes that large institutional investors are buying Bitcoin and hopes that retail investors can follow suit, but retail investors seem not interested. The bank stated that despite Bitcoin’s rise, Coinbase, as the “preferred platform” for retail investors, has seen a decline in trading volume. The bank maintains a ‘underperformance’ rating on Coinbase, with a target price of $30.

Mizuho: While Bitcoin is rising, Coinbase trading volume has decreased, maintaining a “underperformance” rating

With Bitcoin hitting new heights and cryptocurrencies gaining popularity, there has been a surge in investor interest in Coinbase. However, according to Mizuho, investors may face difficult times ahead as Coinbase’s trading volume may not see a boost despite the rally.

Introduction

Cryptocurrencies have been at the forefront of news in recent times, mainly due to the rising interest in Bitcoin. The increased attention has led to a surge in trading volumes across various cryptocurrency exchanges, including Coinbase, one of the leading platforms for crypto trading. However, a recently published report by Mizuho suggests that investors’ expectations of the Bitcoin rally boosting Coinbase’s trading volume may not be met due to a lack of retail investor interest.

Why investors may face a difficult awakening?

Despite the surge in cryptocurrencies, Coinbase’s daily trading volume has not seen a significant rise. In April, the average daily trading volume was around $1 billion, which is lower than March’s trading volume of $1.6 billion. This decline can be attributed to the lack of interest among retail investors.
While institutional investors continue to buy Bitcoin with hopes of gains, retail investors seem uninterested in the cryptocurrency market. According to the report by Mizuho, retail investors may be intimidated by the highly volatile market or may not have the necessary knowledge to invest in cryptocurrencies. The lack of interest from retail investors is a major cause for concern as they constitute a significant portion of Coinbase’s customer base.

The decline in Coinbase’s trading volume

Despite being the preferred platform for retail investors, Coinbase has seen a decline in trading volume. Mizuho maintains an underperformance rating on Coinbase, with a target price of $30. The bank has highlighted the lack of retail investors’ interest as one of the primary reasons for the decline in trading volume.
Moreover, Coinbase’s lack of a diverse product portfolio has also contributed to the decline in trading volume. Other rival exchanges like Binance and FTX offer a wider variety of cryptocurrencies than Coinbase. The lack of product diversity has caused traders to switch to other platforms to access a broader range of investment opportunities. This switch has impacted Coinbase’s trading volume negatively.

Conclusion

In conclusion, while many investors are betting on Bitcoin and expecting a boost in Coinbase’s trading volume, a lack of retail investor engagement may result in an awakening soon. The lack of retail participation is concerning, and if not addressed, it may have a long-term impact on Coinbase’s trading volume. To remain competitive in the highly volatile cryptocurrency market, Coinbase needs to increase its product offerings and attract retail investors to maintain its position as the preferred platform for digital asset trading.

FAQs

1. What is Coinbase, and how does it work?
Coinbase is a cryptocurrency trading platform that enables the buying, selling, and storing of various digital assets. Users can link their bank accounts with Coinbase to buy and sell cryptocurrencies. The platform also offers a digital wallet to store cryptocurrencies.
2. What is the reason for the decline in Coinbase’s trading volume?
The decline in Coinbase’s trading volume can be attributed to the lack of retail investor interest and a lack of diverse product offerings.
3. Why is the lack of retail investor interest a concern for Coinbase?
Retail investors constitute a significant portion of Coinbase’s customer base, and their disinterest in cryptocurrencies might impact the platform’s long-term sustainability.
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