As bitcoin, ethereum and other cryptocurrencies get increasing attention from investors, Wall Street and its traditional banks continue to adjust to the shift. Catch up on this week's top stories highlighting the intersection of these old guard and new school areas of finance with this recap compiled by The Fly.
GAMESTOP LAUNCHES WALLET FOR CRYPTO, NFTS: GameStop (GME) announced Monday it has launched its digital asset wallet to allow gamers and others to store, send, receive and use cryptocurrencies and non-fungible tokens across decentralized apps without having to leave their web browsers. The GameStop Wallet is a self-custodial Ethereum wallet. The wallet extension, which can be downloaded from the Chrome Web Store, will also enable transactions on GameStop's NFT marketplace, which is expected to launch in the second quarter of the company's fiscal year.
On Thursday, Wedbush analyst Michael Pachter kept an Underperform rating on GameStop ahead of the company reporting its fiscal Q1 results, citing valuation and cash burn concerns. The shares "remain at levels that are completely disconnected from the fundamentals of the business due to ongoing support from eager retail investors," said Pachter, adding he thinks GameStop's non-fungible tokens marketplace and wallet are unlikely to become the preferred solution for console and mobile gamers.
COINBASE ‘BUILT TO LAST’: Cowen analyst Stephen Glagola initiated coverage of Coinbase (COIN) on Thursday with an Outperform rating and $85 price target in a note to investors partially titled "Built To Last." Coinbase has a dominant spot volume exchange position in the U.S. and he expects it to be primarily an exchange/retail brokerage-driven story over the next several years, Glagola said. However, he believes it can grow at a double-digit percentage compound annual growth rate for "the foreseeable future" and argues that its security infrastructure and regulatory adherence are a structural advantage over global competitors.
Meanwhile, MoffettNathanson analyst Lisa Ellis lowered the firm's price target on Coinbase on Tuesday to $200 from $600 and kept a Buy rating on the shares after having updated her valuation to reflect her revised outlook for the company, as well as market conditions. She is assuming the trough of the current crypto cycle will be in 2022, with Coinbase's trading volumes down 70% year-over-year and total revenue declining 50% year-over-year, Ellis said. She is also assuming 2023 will be largely flat with 2022, that crypto re-accelerates in 2024 and that 2025 will be the peak year of the current cryptocurrency cycle. Ellis added that the foundation of her Coinbase forecast is her outlook for the crypto investment market over the next four years.
BABEL FINANCE VALUED AT $2B: Crypto lender Babel Finance announced Wednesday the completion of an $80M Series B financing round at a valuation of $2B. The main investors in this round include Jeneration Capital and 10T Holdings, as well as existing shareholders Dragonfly Capital and BAI Capital. Other investors include Circle Ventures and a number of family offices in the Asia-Pacific region. Babel Finance is a service providers to institutions in the crypto financial markets. The company limits its business to BTC, ETH and stablecoins, and serves a select clientele of about 500 customers. At the end of 2021, the firm had an outstanding loan balance of more than $3B, average monthly trading volume of $800M in derivatives, and had structured and traded more than $20B in options products. "The crypto financial market is full of opportunities and hidden risks. From the perspective of short-term profits, the retail market and Altcoins may have higher profit margins, but we pay more attention to the long-term development of the industry and aim to lead in institutional financial services and innovation,” said CEO Del Wang. “This not only helps to overcome the many uncertainties in the early stage of the industry, including regulatory and market uncertainties, it also protects our customers to the greatest extent."
OPENNODE LAUNCHING STRIPE APP: Stripe is planning to enable consumers to access bitcoin after the company ended support for the cryptocurrency four years ago. OpenNode announced Tuesday that it will enable Stripe merchants to gain exposure to bitcoin. As part of the launch of Stripe Apps and the Stripe App Marketplace, the new OpenNode app will allow Stripe users to convert incoming payments into bitcoin in real time, automatically or on demand. Stripe Apps will allow Stripe users to access and use OpenNode’s web-based app from within the Stripe Dashboard via a side panel. Once the OpenNode app has been installed, users will be prompted to connect to their bank using Stripe ACH Direct Debit Payments API/ Stripe users will have two options for converting incoming payments into bitcoin: automatic conversion of a fixed percentage of each incoming Stripe payment to bitcoin in real-time and on-demand bitcoin purchases. For each Bitcoin request, OpenNode will initiate an ACH Direct Debit from the connected bank account.
MASTERCARD EXEC EXPECTS MASS BLOCKCHAIN ADOPTION: Mastercard's (MA) VP of new product development and innovation Harold Bosse believes the mass adoption of blockchain technology and digital assets will happen sooner rather than later, TechCrunch’s Jacquelyn Melinek reported Tuesday, citing comments made during Avalanche's Powering Business with Blockchain webinar. Bosse noted, however, there are several challenges stopping corporations from entering the market, mostly due to lack of management understanding, scalability issues, cost and speed, and regulatory concerns.
CRYPTO STOCK PLAYS: Cryptocurrency revenues have been pointed to as reasons to be bullish on Advanced Micro Devices (AMD) and Nvidia (NVDA) in select research. Ideanomics (IDEX), Riot Blockchain (RIOT), Overstock (OSTK), Pareteum (TEUM) and SRAX (SRAX) are other stocks that have been touted, or promoted themselves, as a way to play the crypto theme.
PRICE ACTION: As of time of writing, bitcoin rose about 1% this week at $29,270 in U.S. dollars, according to TradeBlock.