Mizuho: Coinbase and Robinhood are the companies that benefit "mostly" from rate cuts

According to Coinjie.com, Ruisui analysts said bank processors, consumer lenders and exchanges are the fintech companies that benefit the most from the latest rate cuts in the U.S. Federal Reserve, and Circle and its USDC stablecoins may face resistance. The Fed cut interest rates by 25 basis points to between 4% and 4.25%, and suggested two more cuts by the end of the year. Lower interest rates will make traditional investments look less attractive, which often leads investors to seek higher returns through alternative assets such as cryptocurrencies. Most major cryptocurrencies have risen by about 2% after the rate cut. Ruisui quantitatively analyzed over 13 different fundamental and macroeconomic data items over the past 20 years, from payroll to spread, to draw conclusions about winners and losers. Analysts say both cryptocurrencies and stock exchanges should benefit. “These companies rely on transaction commissions (estimated at 50%-70%). Historically, trading activity (representatives of commissions) tends to rise when interest rates are low,” Mizuho analyst Dan Dolev wrote in a note to clients on Thursday, highlighting Robinhood Markets (HOOD), Coinbase Global (COIN) and eToro (ETOR). Bank processors and lenders that rely on growth in trading accounts should also see favorable factors from falling interest rates. “This is mainly driven by changes in transaction account funds, which tend to grow faster under lower interest rates,” Dolev said. On the other hand, stablecoin issuers like Circle Internet Group (CRCL), whose 100% revenue comes from earnings in assets such as U.S. Treasuries, may be most adversely affected. RedStone co-founder Marcin Kazmierczak said the lower traditional yields make the protocol that offers 5%-10% APY increasingly attractive, which could accelerate the growth of TVL for lending platforms and drive demand for stablecoins as users seek income optimization strategies. Ruisui analysts maintained COIN stock's "neutral" rating and raised their target price from $267 to $300. The agency gave HOOD and ETOR a “outperform” rating, while CRCL gave a bearish “underperform” rating with a target price of $84. The agency has been slightly bearish on Circle shortly after the company's explosive IPO in June. Robinhood and eToro stocks rose 3% today, while Coinbase stocks soared 8%, according to price data from The Block. At the time of release, Circle's stock rose by about 5.8%.