In recent weeks, the Coinbase stock price has seen a sharp decline as Bitcoin and other altcoins have taken a hit. This drop in price is primarily due to the poor performance of Bitcoin, which has fallen from its peak of $108,000 to $95,000, as well as other altcoins like Ethereum and Ripple. As a leading crypto exchange, Coinbase’s stock is closely tied to the performance of these digital assets. When Bitcoin and other cryptocurrencies are doing well, Coinbase tends to see an increase in its stock price. This is because Coinbase holds a significant amount of Bitcoin on its balance sheet and also generates revenue from transaction costs during periods of high trading volumes.
One key factor affecting Coinbase’s performance is the highly competitive nature of the centralized exchange industry. Coinbase has been losing market share to competitors such as OKX, Crypto.com, and Bybit due to its reluctance to list newly launched tokens. Despite this challenge, Coinbase has managed to generate substantial revenue in recent years, with $5 billion in revenue for the trailing twelve months. However, the company saw a significant drop in revenue in 2022 when the Federal Reserve raised interest rates and the crypto market crashed.
A potential catalyst for Coinbase’s stock price is the Base Blockchain, a layer-2 network launched by Coinbase in 2023. In just one year, Base Blockchain has become the sixth-largest chain in the crypto industry, with a total value locked of over $3.48 billion. The network has outperformed other established layer-2 networks like Arbitrum, Polygon, and Optimism in terms of total value locked and transaction volume. When Base Blockchain launches its token, it is expected to receive a multi-billion dollar valuation, which could have a positive impact on Coinbase’s stock price.
Technically, the COIN stock price has seen a drop to $265 but has remained above the 50-week Exponential Moving Average, indicating a potential rebound in the near future. With the holiday season coming to an end, crypto investors are likely to return to the market in January, which could further support a recovery in Coinbase’s stock price. Overall, despite the recent decline in price, Coinbase’s stock may still present a buying opportunity for investors looking to benefit from the potential growth of the Base Blockchain and the broader crypto industry in 2025.
