May 27, 2024

Recently, Hamas militants have been using crypto assets to fund attacks on Israel. In a new investment report, Berenberg Capital Markets revealed how the new trend caused a setback to Coinbase’s crypto lobbying efforts within the United States.

Berenberg Analyst Lists Factors Affecting Coinbase’s Future Performance

Mark Palmer, a Berenberg lead analyst, reacted to Coinbase’s latest financial report in a recent research note. The analyst stated that he sees Coinbase taking a cautious stance due to strict regulatory actions against the exchange in the US.

He noted that recent emerging political tension from the Israel-Hamas conflict forms a contributory factor against Coinbase.

Meanwhile, a report from the Financial Times last week revealed that Israeli authorities forcefully closed and seized funds in over 100 accounts on Binance and other crypto exchanges.

According to the report, Israel said the accounts are aiding Hamas’s fundraising moves. Further, through their crackdown measures, the Israeli authorities have confiscated several crypto assets worth millions of dollars from the accounts.

In his research, Palmer wrote:

While Hamas announced last April that it would no longer use crypto for fundraising due to the ability of authorities to track its movement on blockchain ledgers, we believe the recent headlines are likely to make clarity around the question of crypto’s legal status even more elusive.

Notably, Coinbase scaled up its lobbying efforts in the US over the past few years. The move was part of its strategy and plans to establish clarity and a more crypto-friendly regulatory environment in the country. But Palmer believes the terrorism funding scandal obstructs Coinbase’s lobbying efforts.

Analysts Are Skeptical On COIN’s Sustainability On Long-Term 

Further, Berenberg analysts reflected on their hold recommendation on Coinbase (COIN) stock, setting $39 as a price target. Palmer noted that Berenberg is still cautious regarding the state of COIN.

Their precautionary stance on the stock spiked following COIN’s explosive rally of over 112% this year amid the decline of – 72% for Bitcoin and – 29% for Nasqad.

Palmer said:

Our Hold rating on COIN reflects our view that the stock is uninvestable in the near term.

Also, the analyst pointed out that the ongoing case between the US Securities and Exchange Commission (SEC) and Coinbase can negatively impact COIN and retard potential price momentum.

Palmer noted the effect of the prevailing crypto winter in spreading long-lasting weaker trading volumes in the market. However, he revealed that Berenberg spiked its estimation of customer transaction revenue of the firm from $210 million to $240.8 million.

The change came as supporting proof to the analyst’s indication that Coinbase’s customer take rate would drop more slowly than he expected.

Moreover, Palmer mentioned that Coinbase’s large cash balance could cushion the adverse effects on the firm and offer flexibility. So, he believes the company’s management would continually cut down its expenses while expanding the business for more growth.

Meanwhile, according to data from TradingView, COIN trades at $77.46 as of 08:50 AM EST on October 18, indicating a surge of 2.25% in the past 24 hours.

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