Why Coinbase’s Trading Volume May Not Increase Despite Bitcoin’s Rise

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

Introduction

Mizuho’s recent report suggests that investors who expect the rise of Bitcoin to $30,000 will significantly increase Coinbase’s trading volume may be mistaken. Despite Bitcoin’s rise, the bank points out that retail investors seem uninterested in buying into this trend. This article explains why Coinbase might face difficulty in boosting trading volume despite Bitcoin’s recent surge.

The Current Situation

According to Mizuho, Coinbase’s current trading volume reflects the fact that retail investors are not following large institutional investors in buying Bitcoin. The bank believes that these large investors are pushing the price up in the hopes of attracting retail investors to buy in, but that this is currently not occurring.
The bank noted that Coinbase had an average daily trading volume of less than $1 billion in April, which was down from $1.6 billion in March. Despite being the “preferred platform” for retail investors, Coinbase has not seen a corresponding increase in trading volume despite Bitcoin’s recent rise.

Why Is Coinbase Not Gaining More Volume?

The decline in Coinbase’s trading volume despite the surge in Bitcoin’s price may be because retail investors are increasingly skeptical of cryptocurrencies. While large institutional investors may view Bitcoin as a safe and profitable asset, retail investors are more cautious about putting their money into something that is so unpredictable.
Additionally, retail investors may not have the means to invest in cryptocurrencies in the same way that institutional investors do. Institutional investors may have access to greater capital, which makes it easier for them to buy Bitcoin as a long-term investment. Retail investors, on the other hand, may not have the same amount of capital and may be less comfortable with the risks associated with cryptocurrency.

The Future of Coinbase

Mizuho maintains a “underperformance” rating on Coinbase, with a target price of $30. The bank’s analysts suggest that Coinbase may struggle to gain significant trading volume if retail investors continue to be skeptical of cryptocurrencies. 
Despite these challenges, Coinbase may still have opportunities to increase its trading volume. The company could try to target different types of investors or develop new services to cater to retail investors. In the long run, it is possible that cryptocurrencies will become more mainstream, which would increase demand for Coinbase’s services.

Conclusion

To conclude, Mizuho’s report suggests that Coinbase may struggle to increase its trading volume despite the recent surge in Bitcoin’s price. The bank argues that while institutional investors may be buying Bitcoin in large amounts, retail investors seem uninterested. Coinbase may need to adapt its services and target different types of investors to increase trading volume in the future.

FAQs

Q: What is Mizuho’s current rating for Coinbase?
A: The bank maintains an “underperformance” rating for Coinbase with a target price of $30.
Q: What is the difference in trading volume for Coinbase between March and April?
A: According to Mizuho, Coinbase had an average daily trading volume of $1.6 billion in March and less than $1 billion in April.
Q: Why are retail investors hesitant to invest in cryptocurrencies?
A: Retail investors may view cryptocurrencies as too unpredictable or risky and may lack the same level of access to capital as institutional investors.