Crypto collapse opens price gap with stocks, price targets

Predicting the price of a stock a year from now is hard, even for Wall Street’s best analysts. But for investors who bought into the bullish expectations behind cryptocurrency-related stocks at the beginning of this year, those forecasts now look like pipe dreams.

For 10 crypto stocks tracked by Bloomberg, with at least three analyst price targets at the start of 2022, the average return needed to reach their 12-month price target from January 1 is nearly 1 350%. To put that in perspective, it took Inc. more than eight years — from 2013 to its record high in late 2021 — to return investors that amount.

Shares of crypto exchange Coinbase Global would need to rally a staggering 782 percent from their current level in order to reach their average 12-month analyst price target from the beginning of this year. Still, that pales in comparison to Stronghold Digital Mining, Inc. which entered the year with a target of US$41,25 and now trades for less than a dollar per share, requiring a 5 492 percent jump to reach that mark.

This year’s swift plunge in the price of Bitcoin, which reached 65 percent following the collapse of Sam Bankman-Fried’s FTX, is the main culprit behind the lopsided projections. The world’s largest digital asset touched a record high of nearly US$69 000 in early November 2021, fueling a wave of bullish optimism for almost anything connected to space.

Still, analysts were slow to react to the rapid decline in Bitcoin. The average analyst price target on Coinbase increased roughly 5 percent over the two months following Bitcoin’s all-time high. Over that same period, Bitcoin plunged more than 38 percent and Coinbase’s share price sank roughly 37 percent. Since then, analysts have decreased their 12-month price target for the crypto exchange by an average of 80%. – Bloomberg





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