Following impressive gains, a wary analyst warned investors not to get too carried away from Thursday’s favorable ruling on crypto regulation.
Shares of Coinbase, the largest American cryptocurrency exchange, have risen more than 25% to a 14-month high following a federal judge’s decision which many in the industry perceived as victory. Reports suggest this is in response to a similar Securities and Exchange Commission lawsuit, indicating the belief that digital assets are unregistered securities and should be regulated as such.
Berenberg analysts caution positive investors from taking the cryptocurrency pronouncements from this ruling too far in spite of increased investor fervor. Notable were pointed out that whether or not a digital asset transaction qualifies as a securities transaction “depends on the totality of circumstances and the economic reality of that specific [investment] contract.” This combined with the SEC suit taking legal action for the ‘unlawful facilitation of buying and selling of crypto asset securities’ means investor have to wary of the hype.
The ruling appears to have also helped Bitcoin, which explosively hit its highest price in over a year following the decision. Bernstein analysts declared this to be a “landmark judgment” that may lesson the regulatory cloud the industry has long had hanging over it. The potential prospect of this final cloud clearing could attract additional institutional investment, evidenced by financial players messaging notably BlackRock and fidelity exploring Bitcoin ETFs.
And yet despite all of enthusiasm and the looks the court gave of good cheer, Berenberg analysts believe that the the Coinbase rally “was not warranted.” As such one expects thatCoinbase stock may have hit a summit leaving only valleys to be explored should prudent stockers chose to trade.
