Well, it looks like the new crypto exchange on the block, Bullish, just got a pretty cautious welcome from Wall Street. Analysts over at Compass Point started covering the stock today, but they didn’t exactly roll out the red carpet. They slapped it with a neutral rating and set a price target of $45. That’s a good bit lower than where it’s trading now—roughly 16% below.
And shares didn’t take it well. Bullish, trading under BLSH, closed down 12% on Wednesday, landing just over $54. That’s a far cry from its post-IPO high of $118 last month. It’s been a rocky ride since it hit the NYSE.
Why the Hesitation?
The main worry, according to analysts Ed Engel and Abdullah Dilawar, is whether Bullish can even get into the U.S. market. Right now, it’s focusing on Europe and Hong Kong. But cracking America is a whole other ball game.
The big issue is regulation. Congress still hasn’t passed the CLARITY Act, which would clear up which regulators—the SEC or the CFTC—are in charge of what. Until that happens, everything’s kind of up in the air. And then there’s New York’s BitLicense. It’s known for being, well, tough. Really tough.
The analysts flat-out said they “have a hard time seeing Bullish entering U.S. markets until Congress passes market structure legislation.” For now, all eyes are on New York’s financial watchdog, the NYDFS, which has become the de facto regulator. And the report suggests NYDFS hasn’t been very friendly to newer blockchain tech.
An Uphill Battle for Approval
Even though Bullish is apparently very transparent about how its automatic market maker works, the analysts are skeptical. They just don’t see New York granting a license to an exchange that also acts as its own market maker. It’s a structural thing that might not fly with state regulators.
That’s a major hurdle. Without that license, a huge door remains closed.
On top of that, the analysts think the stock might be overvalued right now. They pointed out it’s trading at 110 times its core operating profit. And it’s still sitting 68% above its IPO price of $37, even after today’s drop. That’s a lot of optimism priced in for a company that can’t operate in the world’s biggest market.
But There’s a Silver Lining
It’s not all doom and gloom, though. The report did hint at some potential. If Bullish can somehow secure a U.S. license, the analysts think it could actually compete with Coinbase, especially with institutions. They noted Bullish’s fees are low, and that could help it grab market share from Coinbase, which has kind of dominated here without much competition.
They even suggested there might be a better buying opportunity for the stock in the next quarter or two. Basically, wait and see if it gets cheaper or if there’s progress on the regulatory front.
Bullish is backed by Peter Thiel and run by Tom Farley, the former president of the NYSE. Farley had said they timed their IPO for when the digital assets industry was beginning its “next leg of growth.” I guess we’ll see how that timing holds up.
All this comes while other crypto outfits, like Circle and eToro, have seen pretty strong public debuts recently. But each company’s path is different
