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Coinbase, the largest cryptocurrency exchange in the US, has seen its shares perform strongly in the second half of this year, rallying from around $46 in early June to a current level of $150. This rally has been driven by a pickup in interest, and volume, in the cryptocurrency space as markets price in the potential announcement of several spot Bitcoin ETFs and the latest Bitcoin halving event.
There are currently 12 spot Bitcoin ETFs sitting on the US Securities and Exchange Commission’s desk waiting for approval from a range of blue-chip investment companies including BlackRock, Franklin Templeton, and Fidelity. These spot ETFs invest directly in Bitcoin – unlike the current futures-based Bitcoin ETFS – and as an investment vehicle would allow a wide range of investors to gain exposure to a regulated product that tracks the performance of Bitcoin accurately. Coinbase is the named custodian in nine of the twelve applications and would hold the underlying Bitcoin on behalf of the issuing companies. Coinbase would charge for this service.
The latest Bitcoin halving event is predicted to occur in mid-April 2024 and with it will bring increased volume and volatility before and after the event. This increase in Bitcoin turnover will also waterfall down the cryptocurrency market into other larger-cap cryptocurrencies and the alt-coin market.
While some of this increased interest has already been priced into the share price, the chart suggests that the shares can go higher still. The shares traded as high as $428 when they appeared on the market in April 2021 before falling over the next two years. Coinbase shares have broken above the 20- and 50-day simple moving averages and now look set to test the 38.2% Fibonacci retracement level at $183 before the 50% Fibonacci retracement level at $230 comes into play. The weekly chart also shows how Coinbase shares have turned from making lower highs and lower lows to now making higher highs and higher lows, a bullish setup.
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As always with cryptocurrencies, a strong degree of caution and firm risk management need to be applied before making any investment decision. If ETFs are not approved by the SEC or are delayed further, Coinbase shares could turn lower quickly, and traders need to factor this in before entering any trade.
Coinbase Weekly Chart
Source: TradingView, Prepared by Nicholas Cawley
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Cryptocurrency has taken the financial world by storm in recent years, with its exponential growth and unparalleled potential for investment gains and economic disruption. Among the many players in the crypto market, Coinbase (COIN) has emerged as a leading platform for buying, selling, and storing various digital currencies. As the first cryptocurrency exchange to go public via a direct listing, Coinbase has garnered significant attention and raised questions about its potential for growth in the midst of the ongoing cryptocurrency craze. In this article, we will explore the potential for Coinbase to grow and sustain its success in the ever-evolving world of digital assets.
The Rise of Coinbase and the Cryptocurrency Craze
Founded in 2012, Coinbase has rapidly grown to become one of the largest and most well-known cryptocurrency platforms in the world. The platform offers a user-friendly and secure way for individuals and institutions to buy, sell, and store major digital currencies such as Bitcoin, Ethereum, and Litecoin. Its popularity can be attributed to its intuitive interface, reliable customer support, and strict security measures.
The cryptocurrency craze has played a significant role in catapulting Coinbase’s success. The values of major digital currencies have been on an unprecedented surge, with Bitcoin hitting an all-time high of over $60,000 in April 2021. This has spurred an increased interest in investing in cryptocurrencies, leading to a surge in the number of Coinbase users. In fact, the platform reported a record-breaking $1.8 billion in revenue in the first quarter of 2021, a staggering 847% increase from the previous year.
Significant Strategic Investments
Coinbase has made strategic investments in expanding its reach and services, positioning itself as a leader in the cryptocurrency industry. In February 2021, the platform announced its acquisition of Bison Trails, a leading blockchain infrastructure provider. This move allows Coinbase to offer cryptocurrency staking services, which enables users to earn interest on their digital assets. Additionally, Coinbase has invested in developing its own custody service, providing a secure way for institutional investors to store large amounts of digital assets.
Furthermore, Coinbase’s partnership with PayPal and Venmo has allowed its users to link their accounts, providing a seamless way for individuals to buy, sell, and spend cryptocurrencies. This integration has opened up a new market of potential users, promoting the widespread adoption of digital currencies.
Potential for Continued Growth in the Crypto Market
As the cryptocurrency market continues to evolve and gain mainstream acceptance, Coinbase is well-positioned to benefit from this growth. The platform has a strong track record of adapting to regulatory changes and offering new services, making it a trusted name in the space.
With over 56 million verified users and over $223 billion in total assets on the platform, Coinbase’s potential for growth is undeniable. The platform’s expansion into new markets, such as Japan and India, indicates its commitment to capturing a larger global market share. Additionally, Coinbase’s trading volume is anticipated to increase as more institutional investors join the crypto market, further driving its revenue growth.
Challenges to Consider
While Coinbase has experienced tremendous success, it is not without its challenges. The volatile nature of the cryptocurrency market poses a significant risk, potentially impacting the platform’s revenue. Furthermore, the increasing number of competitors in the industry, including traditional financial institutions, could threaten Coinbase’s dominance.
There are also concerns about the platform’s dependence on Bitcoin for a significant portion of its trading volume and revenue. As Bitcoin’s dominance in the market fluctuates, Coinbase’s revenue may also be affected.
In addition, the growing regulatory scrutiny on cryptocurrencies may affect the platform’s operations and profitability. Coinbase has already faced legal challenges in the past, and with increased regulatory pressure and potential changes in laws, it may incur additional expenses to comply with these regulations.
Coinbase’s impressive growth and strategic investments indicate its potential for continued success in the cryptocurrency industry. The platform has established itself as a trusted name and continues to expand its reach and services, positioning itself as a leader in the market.
As the cryptocurrency craze continues to attract more investors and gain mainstream acceptance, Coinbase is well-positioned to capitalize on this trend and drive its growth. However, it is important to consider the potential risks and challenges the platform may face in this rapidly evolving market.
In conclusion, Coinbase’s future growth in the cryptocurrency market will depend on its ability to adapt to changes, expand its services, and maintain its competitive edge amidst increasing competition and regulatory measures. Only time will tell if Coinbase can sustain its success and ride the wave of the cryptocurrency craze.