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.
META-BACKED CRYPTO VENTURE TO SELL ASSETS: The Diem Association, a cryptocurrency initiative formerly known as Libra backed by Meta Platforms (FB, MVRS), is winding down and selling its technology to Silvergate Capital (SI) for roughly $200M, the Wall Street Journal’s Peter Rudegeair and Liz Hoffman reported Wednesday. The bank had earlier struck an agreement with Diem to issue some of the stablecoins. The move comes as the association looks to squeeze some remaining value from the venture after it ran into resistance from regulators over its effect on financial stability and data privacy as well as concerns regarding money laundering.
SEC PROBES CRYPTO LENDING FIRMS: The U.S. Securities and Exchange Commission is reviewing cryptocurrency firms Celsius Network, Voyager Digital (VYGVF), and Gemini Trust as part of a broader investigation into companies that pay interest on virtual token deposits, Bloomberg's Joe Light, Matt Robinson, and Zeke Faux reported Wednesday. The SEC's inquiry centers on whether the companies' offerings should be registered as securities, the authors said, noting that the firms are able to pay customers rates higher than most bank savings accounts by lending out their digital coins to other investors.
COINBASE PRICE TARGET LOWERED: On Tuesday, Mizuho analyst Dan Dolev lowered the firm's price target on Coinbase (COIN) on Tuesday to $220 from $300 and kept a Neutral rating on the shares. The analyst believes payments stocks "could rebound sharply" in the second half of 2022 as the sector's two-year revenue growth stack is likely to inflect positively. His analysis of nearly 50 payments stocks shows that performance closely tracks the sector's two-year sales growth stack.
Meanwhile, Piper Sandler analyst Richard Repetto said Tuesday the pullback in Coinbase shares offers an attractive entry point to the growing cryptocurrency and digital asset space. The pace of mainstream crypto/digital asset adoption remains strong and Coinbase is likely to be the "on ramp" for all things crypto going forward, the analyst contended. He suspects the stock's correlation to both bitcoin and risk assets will decouple over time as the company diversifies revenues. Repetto calls Coinbase a top pick with an Overweight rating and $440 price target.
MARATHON INITITATED WITH BUY: On Friday, Jefferies analyst Jonathan Petersen initiated coverage of Marathon Digital (MARA), which he sees being on pace to become the largest public bitcoin miner on an EH/s basis in 2022, with a Buy rating and $51 price target. The company's current fleet of more than 30,000 miners generates 3.5 exahash of processing power, which represents about 1.9% of the total bitcoin mining market, the analyst said. Marathon is expected to grow to 199,000 miners generating 23 EH by year-end 2022, which Petersen estimates will exceed 5% market share on full deployment. The recent selloff in Bitcoin's price moderates the revenue growth outlook, but he still expects about 80% mining margins and a 12-18 month payback period on recent ASIC miner purchases and he assumes the average price of bitcoin in 2022 at about $53,400, Petersen said.
ANALYST SAYS BITCOIN DRAWDOWN ‘NOTHING NEW’: Morgan Stanley equity strategist Sheena Shah said on Friday that estimating the fair value of cryptocurrencies is "very difficult as today all of them trade in a speculative manner," but she also noted that bitcoin's recent 50% correction is "within historical norms" and "nothing new." Bitcoin trades like a macro product and will continue to react to news around central bank easing and tightening, Shah contended, and in order for crypto markets to stop weakening there will need to be signs of less tightening from central banks or some form of new liquidity and leverage being created in the world of cryptocurrencies. For bitcoin in particular, Shah calls out $28,000 and $45,000 as "key downside and upside levels to watch."
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. Overstock (OSTK), Ideanomics (IDEX), Riot Blockchain (RIOT), 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 dropped roughly 3% this week at $36,691 in U.S. dollars, according to TradeBlock.
Bitcoin
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Bitcoin
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Bitcoin
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Ethereum
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Litecoin
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Dogecoin
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Ticker changed to META
-0.47 (-0.16%)
Symbol now META
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Silvergate Capital
-0.04 (-0.04%)
Voyager Digital
-0.44 (-5.81%)
Coinbase
-3.08 (-1.81%)
Marathon Digital
+0.35 (+1.77%)
AMD
-0.95 (-0.93%)
Nvidia
-3.57 (-1.63%)
OSTK
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Ideanomics
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Riot Platforms
+0.01 (+0.07%)
Pareteum
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Srax
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