Shares of cryptocurrency exchange Coinbase (COIN) and stablecoin issuer Circle Internet Group (CRCL) came under pressure on Wednesday, as separate analyst actions highlighted growing headwinds for the digital asset sector. Coinbase dropped 4.2% and Circle fell 4.6% after Raymond James initiated coverage on both stocks with a Market Perform rating, effectively a neutral call, while Citigroup slashed its Coinbase price target by 41% to $235 from $400.
In a note published late Tuesday, Raymond James analyst Madison Suhr acknowledged Circle’s strong position in the expanding digital asset space but expressed limited conviction of “meaningful upside” beyond current expectations. He noted that CRCL trades at approximately 18 times its projected 2027 EBITDA, describing the risk/reward as balanced. For Coinbase, Suhr flagged mounting competitive threats, pointing to the recent launch of crypto spot trading by Morgan Stanley’s E*Trade and the anticipated entry of Charles Schwab. He added, “We have limited visibility into when crypto trading volume rebounds.”
The cautious stance from Raymond James was compounded by Citigroup’s sharp price target reduction for Coinbase. The bank cited regulatory headwinds, including the ongoing SEC lawsuit alleging Coinbase operated as an unregistered securities exchange, broker, and clearing agency. Citigroup also pointed to declining retail trading volumes and a challenging macroeconomic climate. The revised $235 target still implies over 30% upside from Coinbase’s price near $180, but the magnitude of the cut underscores rising skepticism about the company’s near-term outlook.
Compounding the negative sentiment, insider selling at Circle has raised eyebrows. Over the past three months, CRCL insiders have sold $160.3 million worth of stock, with zero purchases recorded. Circle’s Altman Z-Score of 0.18 signals potential financial distress, while the stock carries a forward P/E of 69.65 and a price-to-sales ratio of 4.64, according to the SA Quant system.
The dual pressure from analysts and insider activity comes as the competitive landscape reshapes. Bernstein and Piper Sandler recently noted that Robinhood’s prediction markets revenue may soon eclipse its crypto revenue, suggesting retail traders are shifting away from crypto. With Coinbase’s business heavily reliant on transaction fees, any prolonged downturn in trading volumes or adverse regulatory outcomes could significantly erode its revenue base. Investors now closely watch the SEC lawsuit’s progression and the broader regulatory push as critical factors for both Coinbase and Circle’s future stock performance.
