Crypto Market Volatility: Compass Point Warns of Overvaluation in Thiel-Backed Webull Stock

Compass Point analysts have labeled a Peter Thiel-backed crypto stock as overpriced, citing concerns about valuation amid recent market activities involving BTC and ETH. The analysts warn of a top-heavy market where short-term holders may accelerate selling if unrealized losses become too high, potentially leading to market corrections or consolidations.

Crypto exchange Bullish, backed by Peter Thiel, has seen its stock price soar since its debut on the New York Stock Exchange in August. However, analysts at investment bank Compass Point have initiated coverage of the stock with a neutral rating and a $45 price target, about 16% below its current price, citing concerns about its ability to enter the U.S. market and its valuation [1].

The analysts noted that the U.S. Congress has yet to pass the CLARITY Act, market structure legislation that would clarify the jurisdictions of the Securities and Exchange Commission and Commodity Futures Trading Commission. Additionally, New York State's restrictive BitLicense could hinder Bullish's efforts to enter the U.S. market [1]. "We have a hard time seeing Bullish entering U.S. markets until Congress passes market structure legislation," the analysts wrote. "Until then, NYDFS [New York Department of Financial Services] is viewed as the industry’s de facto U.S. regulator."

Despite these concerns, the analysts believe that if Bullish secures a U.S. license, it could become a formidable competitor to Coinbase, which dominates institutional trading in the U.S. [1]. Bullish's low fees and competitive pricing could help it take market share from Coinbase, which currently has higher institutional fee rates than international exchanges [1].

However, the analysts noted that Bullish's stock seems overvalued, with shares trading at 110 times their core operating profit and 68% over its IPO price. They believe there could be a better buying opportunity within 1-2 quarters [1].

The analysts' warnings come amid recent market activities involving Bitcoin (BTC) and Ethereum (ETH). In 2025, Bitcoin is expected to solidify as a low-volatility macro hedge with 36% correlation to traditional markets, while Ethereum emerges as a risk-on driver, hitting 14.5% market share via ETFs and 4-6% staking yields [3]. This shift in investor sentiment could lead to a top-heavy market where short-term holders may accelerate selling if unrealized losses become too high, potentially leading to market corrections or consolidations.

References:
[1] https://decrypt.co/337962/not-very-bullish-peter-thiel-crypto-stock-ioverpriced-compass
[3] https://www.ainvest.com/news/shifting-investor-sentiment-crypto-assets-risk-risk-dynamics-evolving-roles-bitcoin-ethereum-2509/