Analyst Sees Potential in Crypto Stocks Following Major Selloff
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James Mitchell combines investment banking with cryptocurrency journalism to analyze the institutional adoption of digital assets. Specializing in ETFs and regulation, he translates complex developments…
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According to insights from Wall Street broker Bernstein, there is a significant opportunity for investors in crypto-linked stocks as they approach what could be described as a cyclical low, following an approximate 60% decline from their peak in 2025.
This pullback, framed by analyst Gautam Chhugani as a ‘big discount,’ coincides with the anticipation of upcoming first-quarter earnings, which may be pivotal for market recovery.
The report indicates that the combination of broader macroeconomic uncertainty, geopolitical unrest, and a prevailing negative sentiment towards cryptocurrency has placed pressure on valuations across the sector. However, Bernstein is optimistic that the underlying fundamental growth prospects remain robust.
While maintaining a positive long-term outlook, Bernstein has adjusted price targets for several major players in the market. The target for Coinbase has been reduced from $440 to $330, while Robinhood’s target has shifted from $160 to $130. Figure’s target has also been lowered from $72 to $67, but all three companies continue to receive an ‘Outperform’ rating.
In the context of the broader market correction that has wiped trillions off cryptocurrency valuations, the broker estimates that crypto stocks have retraced about 60% from their previous highs. This trend indicates a significant downturn in Bitcoin, which has struggled to maintain momentum, impacting trading activity and market sentiment.
Despite these challenges, Bernstein highlighted several structural growth factors, such as stablecoins, tokenization, prediction markets, and derivatives, which could bolster the sector’s recovery. They also pointed out that crypto accounts for a relatively small portion of Robinhood’s revenue, while Figure focuses entirely on tokenization.
The firm anticipates that weaknesses in Q1 earnings may establish a bottom for sentiment, setting the stage for a rebound in the latter half of 2026.
These observations emerge amidst a backdrop of declining Bitcoin prices, which saw additional downturns over the weekend following comments from Donald Trump regarding potential shifts in U.S. relations with Iran. This has further contributed to market fluctuations, as Bitcoin dipped towards the $64,000 mark.
Escalating tensions in the Middle East, particularly the conflicts involving Iran and Israel, have raised concerns, complicating the market environment. News of military actions and threats affecting energy infrastructure continues to keep investors on edge.
Moreover, the derivatives market’s dynamics have dampened volatility, as institutional investors have engaged in selling covered call options. This has altered gamma exposure, leading to a scenario where market makers adjust their positions in ways that reduce price fluctuations.
Overall, Bitcoin and the broader cryptocurrency market remain in a phase of consolidation as participants assess the geopolitical landscape, the effects of options-driven behaviors, and prevailing economic uncertainties. Traders are keenly awaiting clear indicators from policy and market liquidity trends as the early spring 2026 period unfolds.
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