Mizuho cut its rating on crypto exchange Coinbase's shares on Friday to underperform from neutral and lowered its price target to $30 from $42, saying it expects depressed crypto trading volume in 2023 and 2024 to result in lower revenue for the exchange.

The stock fell 2.8% to $41.60 in premarket trading.

In a research report, Mizuho also said that interest income from Circle’s USD coin (USDC) has become increasingly important for Coinbase, accounting for 10%-15% of third-quarter revenue, amid deteriorating sentiment and trading volumes.

Any potential changes to Coinbase’s USDC income from Circle could have an “amplified adverse effect on its profitability,” the report said.

Coinbase, which is a co-founder of USDC, on Friday waived off conversion fees for users who wish to switch to USDC from Tether's USDT.

Irrespective of interest income risks, the bank’s analysis shows that 2023 revenue estimates are likely overly optimistic.

Coinbase CEO Brian Armstrong said on Wednesday that the company’s revenue will be half or less what it was last year as the exchange struggles amid sharp drops in cryptocurrency prices and continuing ripple effects from multiple bankruptcies this year, including the recent collapse of rival exchange FTX.

The company's shares have fallen over 80% this year, and the stock has been one of the worst performers on the Nasdaq index.

Coinbase Mizuho Crypto Exchange Stock

Will Canny

Will Canny is an experienced market reporter with a demonstrated history of working in the financial services industry. He's now covering the crypto beat as a finance reporter at CoinDesk. He owns more than $1,000 of SOL.