How another 'crypto winter' could affect Coinbase's stock price, according to Mizuho

Chesnot | Getty Images

The sharp decline in the prices of bitcoin and other cryptocurrencies in recent weeks has raised risks for a "crypto winter" that could drag down Coinbase, according to investment firm Mizuho.

The firm slashed its price target on the stock – which has been public for less than two months – to $225 per share from $315, saying that the big drop in cryptocurrencies had put a major downside scenario on the table. Mizuho has a neutral rating on the stock.

The price of bitcoin was trading at over $37,000 on Tuesday afternoon, well above its recent lows but still roughly 40% below its record high from April after a bout of extreme volatility in the crypto market.

The potential for a "winter," which refers to a period when the price of bitcoin and other digital coins are stuck at low levels following a price crash, could mean a significant hit to Coinbase's business, Mizuho said in a note to clients.

Indeed, one example of a crypto winter would be the decline in digital asset prices that started in late 2017.

More In Pro Insight

CNBC ProThese stocks are the right plays for the next stage of the economy, Wolfe Research says
watch now
CNBC ProWhy BP is Barclays' top pick in the European integrated oil space
CNBC Pro20 strategists predict when stocks will have the next big tumble — and how far they'll fall