Today's been an interesting day for cryptocurrency exchange Coinbase (COIN 5.09%). Despite a rally in the crypto market, which has seen digital tokens appreciate 1.3% over the past 24 hours as of 12 p.m. ET, Coinbase stock has continued lower once again today, sinking 2.3% over yesterday's close.
This move appears to be the result of two key catalysts that have played out in recent days.
The first is reports that India's payment body has stated it's not aware of any crypto exchange using the country's UPI payments instrument. UPI, which stands for Unified Payments Interface, is an integral piece of financial plumbing used by fintech organizations. This news came after Coinbase announced it would be hiring 10,000 people to build an Indian crypto hub.
Additionally, two recent analyst reports on Coinbase appear to be fueling negative investor sentiment today. Yesterday, Eric Volkman pointed out the relevance of price target cuts from JPM and Mizuho analysts related to concerns about profitability and the relevance of NFTs. Investors seem to still be taking those cuts into account today.
Price target cuts are never a good thing, as investors (retail and institutional alike) rely on the outlooks shared by experts closely following companies like Coinbase. Of course, many of the concerns outlined in these analyst notes are nothing new. However, Coinbase's recently bearish momentum in the market has seemingly translated into investors and analysts finding reasons to be bearish on Coinbase stock right now.
This about-face from India's National Payments Corporation is another interesting issue. On the one hand, the fact that India's supreme court overturned the Bank of India's ban on crypto in the past is a positive for this sector. The country appears open to investment, and Coinbase is clear on promoting India as a crypto hub.
However, the otherwise cold shoulder Coinbase is receiving in its attempt to grow its influence in India may be concerning to some investors. While Coinbase asserts that the company is working with fintech partners in India and will work with the NPCI in gaining support for UPI usage, this statement has certainly raised investors' eyebrows.
The growing pains Coinbase is seeing right now are ubiquitous across the industry. Regulators are in a difficult position, forced to consider the positives and negatives of crypto when it comes to shaping regulation. On the one hand, Coinbase could provide thousands of technical jobs within the country and promote India as a crypto hub. However, for a country that appears to be looking to maintain balance with its banking system, it remains unclear how crypto will fit into the picture.
Right now, the outlook for Coinbase stock is a messy one. Accordingly, this company is one that's likely to remain a polarizing option for investors for some time to come.