Key Highlights

● Morgan Stanley cut Gemini Space Station to Underweight from Equal Weight and lowered its price target to $4.75 from $5.50.

● The bank said a better crypto market may not be enough to resolve Gemini's challenges with scale and distribution.

● The stock edged lower before the opening bell and opened at $4.47, just below the new $4.75 target.

● Morgan Stanley raised its Coinbase target to $258 from $250 and its Robinhood target to $160 from $150.

Gemini Space Station (NASDAQ:GEMI) drew attention on the Nasdaq Composite on Friday, October 9, after Morgan Stanley (NYSE:MS) cut its rating on the crypto exchange to Underweight from Equal Weight. The bank also lowered its price target to $4.75 from $5.50.

The core of the argument was that market conditions alone will not solve Gemini's problems. In its note, Morgan Stanley said a better crypto market "may not be enough to resolve Gemini's challenges with scale and distribution." In other words, the analysts see the company's size and its ability to reach customers as the main obstacles, rather than the price of bitcoin.

The stock edged lower before the opening bell and opened at $4.47. The call made Gemini one of the more discussed crypto names of the day. The new target sits slightly above where the shares opened.

Same bank, different views across crypto

Morgan Stanley's view on Gemini contrasted with its stance on larger rivals in the same research cycle. The bank raised its price target on Coinbase (NASDAQ:COIN) to $258 from $250 while keeping an Equal Weight rating, with analyst Michael Cyprys saying concerns about brokerage cash balances and AI could be overdone. It also lifted its target on Robinhood (NASDAQ:HOOD) to $160 from $150, with an Overweight rating.

Elsewhere, Barclays (NYSE:BCS) analyst Nik Cremo raised his price target on Strategy, the company known for its large bitcoin holdings, to $175 from $160, with an Overweight rating. Taken together, the calls suggest analysts are increasingly separating crypto-linked companies by business strength, with scale a key dividing line.

A mixed week for crypto

The backdrop for digital assets was steady rather than strong. Bitcoin rose to about $82,420 on Friday, up roughly $684, after bouncing from a Thursday low near $80,300. It was still lower for the week, down from around $84,497 the previous Friday.

Fund flows also cooled. US spot bitcoin exchange-traded funds recorded about $244 million of outflows on Thursday and roughly $729 million over two days, putting them on pace for their first weekly outflow in four weeks, according to market data.

Higher interest rates are another drag on speculative assets. The Fed raised rates in September for the first time since 2023, and the 10-year Treasury yield hovered near a 24-year high. Fed Governor Christopher Waller said Thursday he anticipates additional hikes to bring inflation back to the Fed's goal.

Stocks rose overall

The broader market finished the week on a positive note. The Nasdaq Composite gained 172.83 points to 27,366.17, the S&P 500 rose 46.18 points to 7,811.54, just shy of its record close, and the Dow added 423.31 points to 51,654.95. Financial stocks were among the S&P 500's stronger sectors as investors positioned for bank earnings.

Ross Mayfield, investment strategy analyst at Baird, linked the choppy tone to shifting sentiment around Iran, saying: "That's why it's a fairly tepid rally".

Platform Trading Volumes and Customer Growth Are the Next Markers Morgan Stanley Singled Out

US stocks trade on Monday, October 12, while the bond market is closed for Columbus Day. On the macro side, September consumer prices land on Wednesday, October 14, and the big banks report from October 13 to 16. The Fed meets on October 27 and 28, and the path of rates will matter for crypto prices and the companies built around them. For Gemini, the next markers are trading volumes on its platform and any update on customer growth, the areas Morgan Stanley singled out.