Coinbase (COIN): crypto stocks bounce back at a key level

Yesterday, COIN shares of the crypto exchange Coinbase increased by 8.59%, recovering a very important level on the chart against the dollar for the fate of the price action.

After an impressive 2023 in terms of numbers for the action and a rather disappointing start to 2024, the bulls are making their presence felt in the crypto market.

Accompanied by the rise of BTC, now COIN can aim for a new annual high by mid-year.

Meanwhile, Coinbase, to support the growth of its stock, will have to face new challenges that have emerged with the introduction of the first Bitcoin spot ETFs.

Let’s see all the details below.

Summary

• Coinbase (COIN) shares rise by 8.59% and pave the way for new crypto gains
• The crypto exchange and the challenge with Bitcoin spot ETFs, according to Leverage Shares

Coinbase (COIN) shares rise by 8.59% and pave the way for new crypto gains

Coinbase shares (COIN) yesterday followed part of the rally recorded by Bitcoin, which in the crypto market is up 9% in the last week, managing to recover a crucial price level for price action purposes.

The title of the US crypto exchange, in 2023, sparked excitement with a 390% increase, following two extremely negative post-IPO years.

Instead2024 for COIN opened with a correction, with prices dropping from 175 to 118 dollars in the month of January, for an overall dump of about 26%.

However, it now seems that the actions of the San Francisco giant have embarked on a recovery phase, with the bulls yesterday following up on the demand after the positive candle recorded on Wednesday.

In just one day, Coinbase’s stock rose by 8.59%, reclaiming the $130 cluster and avoiding the formation of a bearish pattern with the offer that would have formed a new low below $115.

It remains crucial at this moment to definitively recover the $135 by today’s closing of the Nasdaq market, in order to increase the chances of a bullish continuation next week.

If it succeeds in its endeavor, the action of the crypto exchange would have the path cleared up to the next resistance located at 160 dollars, and then fight against bearish sales in order to surpass new highs and push prices above 185 dollars.

Pay attention also to possible negative scenarios in which the stock performs a fake bullish move and then returns below $115: in that case, the objective will be to seek a new annual low as quickly as possible.

The market volumes are slightly down after the big rally that started in November, while the RSI indicator has formed a double bottom on the chart, which is very encouraging and could open the doors for an imminent growth of the asset.

Coinbase maintains a market capitalization of $31.71 billion, while the company awaits the release of its Q4 2023 financial statements, the results of which could provide further positive momentum for COIN if the generated revenues exceed investors’ expectations.

Daily chart of Coinbase stock price (COIN/USD)

The crypto exchange and the challenge with Bitcoin spot ETFs, according to Leverage Shares

While the COIN action tries to keep up with the long bullish strides of Bitcoin, the Coinbase exchange is on the verge of facing new challenges in order to maintain a strong financial position in the crypto market.

In particular, as noted a few days ago by the provider of derivative products Leverage Shares in a note, the approval of the first spot ETFs in the United States was a groundbreaking event for the crypto market, which could both benefit and disadvantage Coinbase.

The analyst Sandeep Rao of Leverage Shares is convinced that in order to maintain its robust financial data and support the growth of the COIN stock, the exchange will have to make a lot of effort to not lose market share in Bitcoin transactions.

The launch of ETFs on American soil could therefore reduce Coinbase’s revenue from cryptocurrency purchase fees, considering that these investment products offer more advantageous fees compared to those of the San Francisco company.

As Rao quotes:

“Most spot bitcoin ETFs offer fees below 0.4%, while Coinbase charges between 1.5% and 4%,” Rao said in an interview. “Therefore, investors may prefer to gain exposure to bitcoin through an ETF, which could result in a decline in Coinbase’s bitcoin transaction revenue. Bitcoin transaction fees account for about 17% of Coinbase’s total revenue.”

At the same time, it should be considered that Coinbase acts as custodian for 8 out of the 11 Fund Managers approved by the SEC, receiving a 0.2% commission on traded volumes in addition to an additional fee for the storage of crypto assets.

It will be difficult to determine what impact the newly negotiated funds will have on the stock market, as on one hand they could reduce the exchange’s revenues while on the other hand they could increase them.

What is certain is that overall the overall netflow trend on these ETFs, between the strong outflows of Grayscale and the large inflows of BlackRock, Fidelity, and Ark, will determine the path that Coinbase and its stock will take.

The more BTC will be stored by ETFs, the more the crypto exchange will earn commissions and at the same time more circulating supply will be locked in the market, pushing for a rise in the prices of digital gold.

In this sense, if we were to take a positive turn, the cascading effect on the reduction of Bitcoin supply (further reduced in the short term by the imminent halving) and the increase in the price of the same resource, could bring greater volumes to the market, skyrocketing profits and sending COIN “to the moon”.

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