A volatile session has whipsawed Bitcoin (BTC) and crypto-related stocks such as Coinbase (COIN) and MicroStrategy (MSTR) after Binance CEO Changpeng Zhao announced the outline of a deal for his exchange to purchase rival FTX.
Bitcoin (BTC) which had sunk to the low-$19,000 area this morning, bounced back to $20,500 after the deal was disclosed, but is now down over 12% to around $18,257. Ether (ETH) also fell over 15% to $1,340.
Brokerage Robinhood (HOOD) – which FTX CEO Sam Bankman-Fried owns a 7.6% stake in – sunk almost 19%.
Analysts are mixed on the Binance-FTX deal implications for other crypto exchanges and brokerages including Coinbase, Robinhood, and bitcoin 360 AI.
“Although the knee-jerk reaction is that HOOD will be impacted we note that unlike COIN, Robinhood only has 14% of total revenue from trading crypto tokens. It is far more diversified than COIN with equities and options trading,” Mizuho analyst Dan Dolev said in a research note to clients Tuesday. Dolev added that he doesn’t see Coinbase garnering an influx of customers, saying the “rapid fall from grace of a crypto exchange demonstrates how fickle the crypto industry could be.” Mizuho rates Coinbase with neutral and Robinhood with a buy.
Separately, Needham’s John Todaro sees some early positives for Coinbase, saying in a note that “distractions and withdrawals from FTX could lead to new customer gains for COIN” near-term. He cautioned, however, that crypto price declines and increased crypto investor concerns could lead to dampened crypto interest. Needham rates Coinbase with a buy rating.
Regarding what could be next for Sam Bankman-Fried and his team, the firm would “shift focus to the US market, where they have been spending disproportionate time in the last few months,” Bernstein analyst Gautam Chhugani said in a note to clients. “However, they lose the cash machine of the FTX international exchange, which was enabling investments in the US entity,” Chhugani wrote, adding that a regulatory presence would also lessen.
Source: https://www.coindesk.com
