Coinbase (COIN) is a leading player in the cryptocurrency industry, where it operates one of the top exchanges in the United States.
The company has also expanded its business in the past few years. It has launched Base, a layer-2 network that has become the third-biggest processor of cryptocurrencies in the decentralized exchange industry.
Coinbase has also grown to become the biggest custodian in the industry, offering its services to companies like Grayscale, Ark Invest, and Blackrock. It is also the fifth-biggest holder of Bitcoin in corporate America after MicroStrategy, Marathon Digital, Riot Platforms, and Tesla.
As such, while Coinbase makes most of its money through transactions, it is generating substantial sums of money in subscriptions and other services.
Coinbase stock was trading at $308 in the pre-market on Monday, bringing its 12-month gains to over 2000 and its market cap to $67 billion. Its HypeIndex was up by 73%.
Positive hype
Coinbase has attracted positive hype after Donald Trump won the American election last week. He is seen favourably by investors because of his pro-crypto stance, meaning that he will appoint friendly regulators.
Coinbase also came into the spotlight after Bitcoin and other cryptocurrencies surged to their highest level on record. The market cap of all coins is nearing the important resistance level at $3 trillion.
The company does well when cryptocurrencies are soaring because it leads to higher volume and improves the valuation of its Bitcoin holdings.
Analysts are optimistic that Bitcoin will soar to over $100,000 in the near term as institutional investors pile in.
Coinbase will benefit as ETF inflows jump. Data shows that spot Bitcoin ETFs have had over $25 billion in total net inflows. Ethereum ETF inflows are also rising as its price also bounces back.
This price action means that Coinbase’s financial results will continue doing well. Its quarterly revenue rose from $623 million in Q3’23 to over $1.12 billion last quarter, a trend that will continue for a while. Its adjusted EBITDA also more than doubled to $449 million.
Most analysts have a bullish outlook for the stock, with the most bullish ones being H.C Wainwright, Needham, JMP Securities, and Canaccord Genuity.
Coinbase could generate some substantial sums of money if it listed the Base Blockchain token through an airdrop. Similar tokens have a market cap of over $3 billion.
Negative hype
Coinbase is losing market share in terms of transaction and users from other international companies like OKX and Bybit.
The company is not making substantial money from Base because its platform is known for its low transaction costs.
Coinbase stock is relatively overvalued, with its valuation being based on Bitcoin prices.
Bitcoin is a highly cyclical asset that rises and fall. As such, there is a risk that the stock will drop if Bitcoin crashes.
Coinbase stock analysis
Coinbase share price has jumped sharply in the past few days and formed a golden cross pattern, with the 50-day and 200-day moving averages crossing each other. It is also nearing the important resistance point at $283.57, its highest level in March.
All oscillators like the Relative Strength Index (RSI) and the Stochastic Oscillator have all pointed upwards. Therefore, there are chances that the shares will continue soaring in the coming weeks as cryptocurrencies surge.
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HypeIndex is an AI platform that detects Hype in stocks and cryptos before it moves the market, providing reliable early detection for profitable investment opportunities.
The algorithm for our proprietary HypeIndex score is based on sentiment analysis, data science and machine learning.
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