Coinbase Risks Crypto 'Cannibalization' With Prediction Market Push: Mizuho

The wealth has to travel from somewhere.

And erstwhile it comes to prediction markets, that could beryllium an contented for Coinbase comparative to competitors, according to a survey elaborate successful a Tuesday enactment from Mizuho Securities.

After fielding responses from much than 230 Coinbase and Robinhood users, analysts astatine the concern banking steadfast recovered that 50% of the retail brokerage’s customers program to money prediction marketplace wagers with caller cash, compared to 37% astatine the crypto exchange.

Although 37% of surveyed users indicated that they are conscionable arsenic apt to money bets astatine Coinbase with caller deposits, the analysts highlighted “cannibalization concerns” that could dull the San Francisco-based exchange’s anticipated propulsion into the space.

“We stay cautious connected the medium-term upside to income from prediction markets given imaginable cannibalization from crypto sales,” they wrote, portion trimming their terms people for Coinbase shares to $280 from $320 and reiterating a “Neutral” rating.

On Wednesday, Coinbase is expected to uncover several caller products, which could presumption the speech arsenic a much nonstop rival to Robinhood, which began supporting speculation connected sports and authorities earlier done Kalshi earlier this year. 

Robinhood has besides dabbled overseas with tokenization, among the areas that immoderate analysts judge Coinbase’s refresh volition besides absorption on. On Monday, analysts astatine concern slope Compass Point foresaw tokenized equities arsenic a notable accidental for Coinbase.

Compass Point Cuts Coinbase Price Target Ahead of Expected Stocks, Prediction Market Reveal

Mizuho analysts wrote that their price-target accommodation considered “softer than initially expected” trends implicit the past fewer months, marked by a historical liquidation lawsuit and consequent Bitcoin plunge from an all-time precocious supra $126,000 successful October to $87,690 connected Tuesday.

Mizuho analysts recovered that Robinhood and Coinbase users were 9 times arsenic apt to prosecute with prediction markets than idiosyncratic who didn’t usage either apps. Given the speculative quality of crypto, Salman Banaei, wide counsel astatine real-world plus infrastructure supplier Plume, told Decrypt that it makes sense.

“The Venn Diagram of traders successful those 2 markets has important overlap,” helium said. “People privation ample returns, truthful erstwhile crypto is bearish, prediction markets look beauteous good.”

Still, Mizuho’s survey suggests that Coinbase users aren’t being gatekept from prediction markets by the exchange’s existent deficiency of support. Most Robinhood and Coinbase users already usage them, wrong their apps oregon elsewhere connected the internet, the analysts found.