Coinbase (COIN) Stock Regains $300, Analyst Expect More Benefits From the Approval of a Bitcoin (BTC) Futures ETF

Bitcoin (BTC) price is trading nearly 3% higher as the buyers continue to push for the fresh record-high ahead of the expected market debut of the first BTC Futures ETF.

ProShares' Bitcoin Strategy ETF is due to debut today under the ticker BITO if the Securities and Exchange Commission (SEC) does not oppose it. Many industry experts believe Bitcoin stands to benefit from the approved ETF.

"It can attract flows from investors who prefer the ease of an ETF over the perceived risk of an exchange," Martha Reyes, head of research at crypto exchange Bequant, told Reuters.

Piper Sandler analyst Richard Repetto has weighed in on the debate around the first Bitcoin Futures ETF with positive remarks. He believes the approval is another step in the walk towards greater "crypto legitimacy".

“While not the approval of a "spot/physical ETF" that many in the industry initially wanted, still we believe a futures ETF tied to the solid liquidity and trusted regulatory regime at the CME is a positive story. SEC Chair Gary Gensler clearly favored a "bitcoin futures" ETF, though the CME's bitcoin futures is still tied to the underlying bitcoin price of 5 unregulated crypto exchanges. We suspect the liquidity (October TD bitcoin futures ADV = 9.4k contracts) and added layer of regulation at the CME provided a greater level of confidence especially with the overall oversight of crypto still uncertain,” Repetto said in a client note.

In particular, Repetto believes Coinbase (NASDAQ: COIN) will also benefit from the ETF approval.

“We think COIN benefits from the tacit approval of a bitcoin futures ETF as it brings more credibility and attention to the crypto space as a whole and will likely lead to higher volumes across the industry over time. In this note, we review some of the pros and cons of a bitcoin futures ETF vs. one backed by "physical" spot bitcoin. We also examine the potential tailwinds from the anticipated launch of COIN's NFT marketplace.”

Therefore, the analyst reiterated an Overweight rating and a $335.00 per share price target on COIN on 3 key factors outlined last month: 1) COIN's consensus estimates need to rise, (2) projected crypto volumes in 3Q21 were likely better than expected, and (3) stock underperformed recently before raising 20%.

“While the consensus 3Q21 EPS estimate has risen 6% to $1.47, our forecast of $2.08 is still well above the street. We suspect investors taking a more optimistic view on 3Q21 volumes and transaction revenues is driving this continued upside,” the analyst concluded.

The Coinbase stock price is up 2.5% to regain the $300 handle.

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