Coinbase (COIN) is one of the most talked-about stocks of the year. The US-based company, which is one of the world’s largest cryptocurrency exchanges, went public in April 2021, making its debut at a time when cryptocurrencies, including bitcoin (BTC) and ethereum (ETH), were trading around record highs.
Will the COIN stock manage to return to the bullish market sentiment of the first days of its trading, or will the downwards movement seen by the stock in May 2021 prevail for the rest of the year?
Current Coinbase price and major drivers
Coinbase stock news
Coinbase stock floated on the Nasdaq stock exchange on 14 April 2021, the same day as bitcoin (BTC) reached its all-time high of $64,863. The COIN shares closed their first trading day at $328.29, which gave the stock an initial market capitalisation of $85.8bn.
Shares started trading at $381 and skyrocketed to the high of $429.54, before falling below their starting price. However, the COIN price was still much higher than the reference price of $250.
The COIN stock reached its low of $208.00 on 19 May 2021 and gradually rebounded to its current price level of around $240.72 as of 5 July 2021.
Coinbase price drivers
What are the major factors driving the price of the COIN stock? Common triggers to consider:
Financial performance: Coinbase Q1 revenue exceeds full year 2020
One of the world’s largest cryptocurrency exchanges, Coinbase had more than 56 million verified users as of 31 March 2021, up from 43 million at the end of December 2020.
On 13 May2021, the company reported preliminary first-quarter results with 6.1 million monthly transacting users (MTUs), up from 2.8 million at the end of the fourth quarter.
The company had $223bn of cryptocurrency assets on its platform, giving it a market share of 11.3%. More than half the assets, $122bn, are held by financial institutions rather than individual retail investors, reflecting the increased interest in cryptocurrencies from traditional financial firms.
Coinbase reported revenue of $1.8bn for the quarter, exceeding the $1.3bn revenue earned in the whole of 2020. According to its prospectus filed with the Securities and Exchange Commission (SEC), revenue doubled in 2020 from $533.7m in 2019.
The company reported net profits of approximately $771m for the first quarter, compared with $322.3m for the full year 2020.
Coinbase predicts its MTUs to average four to seven million in 2021, depending on the cryptocurrency market capitalisation and price volatility. It anticipates institutional interest will continue to increase.
The cryptocurrency market performance: price cycles
Activity on the Coinbase platform fluctuates in line with prices for bitcoin (BTC) and alternative coins, known as 'altcoins'. The company generates more than 90% of its revenues from transaction fees, making its performance dependent on trading volumes.
The strong rally in cryptocurrency prices during the first quarter captured investors’ attention and has seen a growing number of people trading cryptocurrencies for the first time.
Cryptocurrency markets have seen four major price cycles since 2010, which have typically lasted two to four years, the company said in its financial update. The cycles have substantially increased the cryptocurrency market capitalisation and attracted new users. Coinbase explained:
The company added: “In terms of expenses, we intend to prioritise investment, including in periods where we may see a decrease in the Bitcoin price. This is because we believe that scale is central to achieving our mission and it is still early in the development of this industry.”
The recent dip in the Coinbase stock price was driven by the sharp decline in the cryptocurrency market, which triggers FUD (fear, uncertainty, and doubt) among investors and traders.
Tesla’s announcement that it will no longer accept bitcoin (BTC) as payment and the Chinese ban on cryptocurrency services added downward pressure on the cryptocurrency market, and, eventually, on the Coinbase stock.
New partnerships: Apple Pay and Google Pay
Coinbase shares reacted positively to the news that the USA’s largest crypto platform signed an agreement with Apple (AAPL) and Google (GOOG) payment networks. This means that US customers can now use their debit Coinbase cards with Google Pay and Apple Pay to easily spend cryptocurrency holdings on the go, and even start earning up to 4$ back in crypto rewards.
Coinbase explained that it will automatically convert cryptocurrencies to US dollars and send the funds to the owner’s Coinbase card for withdrawals and purchases.
COIN stock trading: trader sentiment
Coinbase stays at the forefront of the cryptocurrency industry, and the growing adoption of cryptocurrencies, especially bitcoin and ethereum, bodes well for the COIN stock price prediction and traders’ sentiment.
Wedbush analyst Dan Ives wrote in a note to clients, as reported by Bloomberg:
According to Investing.com, the monthly technical analyses for Coinbase share trading based on moving averages offer six buy and six sell recommendations; monthly technical indicators show five buy and one sell signal. Overall, the monthly Coinbase sentiment from investing.com is Neutral.
Coinbase stock price prediction: algorithm-based forecasting services
TipRanks’ COIN price prediction
According to TipRanks’ latest Coinbase stock prediction, based on 16 analysts offering year-long price targets, the average price target for COIN is $381.93, which represents a 66.11% increase from the last price of $229.93.
The highest analysts’ price target for the next 12 months is $650.00, while the lowest expected price is $225.00. Price targets are pretty bullish, and analysts rank the stock as a Moderate Buy.
CNN Money’s Coinbase stock forecast
Although Coinbase is trading 45% lower than its all-time high, analysts from CNN Money share positive sentiment on COIN stock, rating it as a Buy.
According to their COIN stock price prediction, the median price is $335.00 within the next 12 months. The highest analyst’s target for COIN is $650.00 and the lowest is $225.00.
Walletinvestor’s Coinbase stock prediction
Analysts from WalletInvestor consider Coinbase as a Good long-term investment. They give it a $262.39 median price target for the next 12 months. According to their Coinbase stock prediction 2026, the stock’s price could hit $405.60 in a five-year period.
Don’t forget that stocks’ past performance does not promise returns in future. Individual analysts or algorithm-based forecasting services can get their predictions wrong. Which analysts you choose to believe is down to your own view of the Coinbase stock predictions.
Should I buy Coinbase (COIN)?
There are several reason why traders may want to invest in Coinbase stock:
Relation to the cryptocurrency market.
Coinbase stock is a traditional NASDAQ-listed stock, whose underlying business is directly related to the cryptocurrency market. Operating as one of the largest US-based cryptocurrency exchanges, Coinbase stoсk performance is affected by the volatility of the cryptocurrency market.
Although it could be a double-edged sword for long-term investors, Coinbase stock could bring good trading opportunities for short-term CFD traders, who can benefit from COIN price fluctuation in either direction.
Mainstream cryptocurrencies adoption
In general, people are becoming more aware of what cryptocurrencies are and how they operate. Coinbase contributes to making digital currencies accessible to the general public.
According to the "Global Blockchain and Cryptocurrency Market 2021" research, “Cryptocurrency is gaining momentum globally, with developing markets setting the trends”. The report indicates that by 2030, “blockchain technology is expected to be a significant contributor to the global GDP, lifting it up to $2 trillion”.
Should I sell Coinbase (COIN)?
Increased cryptocurrency volatility
The cryptocurrency market has been going through another turbulent period triggered by the Chinese ban of cryptocurrency services. According to Forbes as of 19 May 2021, Coinbase, Binance and some other crypto exchanges were forced to restrict trading or even crashed during a massive sell-off that cut around $700 billion off the cryptocurrency market.
A big part of Coinbase’s revenue comes from commissions from cryptocurrency trading. The company earned 83% of its $1.8 billion revenue for the Q1 2021 from retail transaction fees. Therefore, falling crypto prices can significantly affect Coinbase’s financial results.
Coinbase could be considered as a first-mover when it comes to processing cryptocurrency transactions, but the competition is growing, with new brokerage companies offering low-cost or even commission-free trading services.
According to the Mizuho investment bank commentary:
Therefore, if or when Coinbase has to cut its trading fees, it will impact the company’s profitability – regardless of bitcoin (BTC) and other cryptocurrency prices.
Still, whether you should buy or sell Coinbase (COIN) stock is your decision, based on the information available from your personal research, your risk appetite, the spread of your portfolio and any hedging you have in place, taking into account how much you are prepared to put at risk.
Traders should devise their own trading strategy and identify personal investing goals. We suggest doing thorough research before every trade, considering fundamental and technical analyses, a range of expert opinions and the latest market trends. This will help you to decide if a particular stock fits your investment portfolio.
Trade Coinbase Global, Inc. - COIN CFD
Big backers and holders of Сoinbase stock
Coinbase CEO and Co-founder
Owned 2.7m Class A and 36.9m Class B Coinbase shares as of the company’s market debut, according to the company’s prospectus.
“Coinbase’s mission is to create an open financial system for the world. This means we want to use cryptocurrency to bring economic freedom to people all over the world”.
20 September 2020
Union Square Ventures
Owned 14.9m Class B shares
Invested $5m at a price of $0.20 per share
“We have been thinking about and looking to make an investment in the Bitcoin ecosystem for several years. Today, we are happy to be able to talk about our first investment in the sector. Coinbase is where I have purchased my bitcoin and keep it”.
Marc L. Andreessen
Owned 5.5m Class A shares and 23.9m Class B shares
According to the Coinbase prospectus, Andreessen Horowitz and its affiliates own more than 5% of outstanding capital stock.
Frederick Ernest Ehrsam III
Coinbase Co-founder and Board member
Owned 2.5m Class A shares and 15.1 Class B shares
“When Brian Armstrong and I started Coinbase in 2012, a bitcoin was worth $6 and only known by a few nerds on the internet. Bitcoin was the crazy idea that the world could have digital money for everyone.”
Founder of Initialized Capital
Invested $300,000 in Coinbase in early 2013 at $0.15 per share. This translated into a stake of 0.66% in the cryptocurrency exchange at the time of its IPO, the company confirmed to Forbes. At a COIN price of $328 at the end of its first trading day, the stake was valued at $680m.
“I feel like now I have the golden ticket. What I’m excited about is how we build the next big platform, and have that actually mean something.”
Coinbase short traders
According to the data analysis by MarketBeat, the most recent Coinbase (COIN) short trades include:
Coinbase stock history
Coinbase share price history
5 June - 5 July 2021
Sideways trading around $230-250.
7 May - 7 June 2021
COIN stock lost 23% of its value, moving down from $302.00 to around $230.00 at the beginning of June 2021
14 April – 6 May 2021
Coinbase gradually descended from $328.28 to $253.46 but rebounded to $302.74, gaining back 19% on 11 May 2021.
14 April 2021
Coinbase stock floated on the NASDAQ stock exchange via direct listing. Ahead of the listing, the COIN reference price was set at $250.00, but the stock launched at $381.00 per share.
The COIN stock price immediately surged to $429.54, before falling to $328.28 by the end of its first trading date, having lost 23.5%.
Warning: past performance is no guarantee of future performance.
Coinbase profile: everything you need to know about COIN
Coinbase was founded in 2012 by co-founders Brian Armstrong, formerly an engineer at Airbnb (ABNB), and Fred Ehrsam, a former trader at Goldman Sachs (GS). They aimed to make it easy for anyone with an internet connection to send and receive bitcoin (BTC) securely through a simple and intuitive platform.
Today, Coinbase operates one of the world’s largest cryptocurrency exchanges. It lists more than 90 cryptocurrency assets for trading.
The platform had around 56 million verified users in over 100 countries at the end of March 2021, up from 43 million users at the end of December 2020. Of those users, 6.1 million carried out monthly transactions.
Early investors in Coinbase included Y Combinator, an incubator that provided startup funds, Union Square Ventures, Andreessen Horowitz, Ribbit Capital, Spark Capital, Greylock and MUFG.
Coinbase stock went public on the NASDAQ via direct listing on 14 April 2021, to capitalise on rising interest in cryptocurrency trading. The company opted for a direct listing rather than a traditional initial public offering (IPO). Unlike an IPO, in which underwriters issue and price new shares, a direct listing company involves executives and other investors selling some of their shares to the market directly.
The company operates two platforms – its basic Coinbase service acts as a wallet for users to buy and sell cryptocurrencies, while its Coinbase Pro service, which operates in the US, UK and Europe, offers a professional trading interface with more advanced features.
Customers tend to start by buying cryptocurrencies on the Coinbase platform and then go on to use its other products to stake coins and tokens to collect interest, earn savings rewards and borrow funds against their holdings.
Coinbase expanded beyond bitcoin in 2016, adding support for ether (ETH), the world’s second-largest cryptocurrency. It continues to add new digital coins and tokens to its platform in response to growing liquidity.
In 2018, the company launched Coinbase Ventures, an early-stage venture fund, to invest in cryptocurrency and blockchain startups. The company has since invested in more than 70 companies, including blockchain protocol developers, decentralised finance (DeFi) applications and non-fungible token (NFT) exchanges.
The exchange is increasingly being used by institutional investors as they seek to gain exposure to cryptocurrencies on behalf of their clients. Since the beginning of 2021, the company has experienced a 170% growth in institutional investors piling into the cryptocurrency market, the company shared in its earnings call.
Coinbase had around $45bn of institutional investments in December 2020m and managed to increase this number to $122bn in the first quarter 2021. According to Drew Robinson, Head of hedge fund sales at Coinbase:
The firm also announced the acquisition of institutional data analytics platform Skew as it looks to tap into the growing market of institutional investors.
Co-founder and CEO at Coinbase
Founder, CEO and CIO at ARKInvest
As of 16 June 2021, ARKInvest’s accumulated Coinbase stock holdings comprise 4.63m shares. The COIN stock became one of the top ten holdings in ARK’s Innovation fund.
There are two major ways to consider, if you decide to invest in Coinbase stock. If you’re willing to hold the company’s stock for the long-term, you can buy the shares on the NASDAQ exchange through a share broker or dealing platform. In this case, you actually own a share in the company.
Alternatively, you can trade Coinbase stares by speculating on the COIN stock price fluctuations with contracts for difference (CFDs) without having to actually own COIN shares. This is considered a short-term investment, as CFDs tend to be used within shorter time frames.
Trading Coinbase shares with CFDs provides you with the possibility to trade COIN in both directions. Open a long position, speculating that the price will go up, or vice versa, go short, if you believe the price will fall.
Always remember that market prices can go against you. Do your own research and use risk management tools, such as stop-loss orders, to mitigate the risks.
Coinbase stock is closely connected with the cryptocurrency market. Therefore, the highly volatile nature of cryptocurrencies may affect the price of the COIN stock.
If you are willing to trade on the Coinbase stock price fluctuations with CFDs, follow the interactive Coinbase stock chart, do your own technical and fundamental research and decide whether the cryptocurrency exchange fits your investment portfolio.
Why trade Coinbase stocks at Capital.com?
If you are looking to trade COIN shares with CFDs, Capital.com has the advantage of offering advanced features to help investors refine their strategies and enjoy the ultimate trading experience.
Advanced AI technology at its core: a Facebook-like news feed provides users with personalised and unique content depending on their preferences. If a trader makes decisions based on biases, the innovative SmartFeed offers a range of materials to put them back on the right track. The neural network analyses in-app behaviour and recommends videos, articles and news to polish your investment strategy.
Trading on margin: providing trading on margin with the help of CFDs, Capital.com gives you access to the stock market even with a limited amount of funds in your account.
Trading the difference: when investing in Coinbase shares using CFDs, you do not buy the underlying asset itself, meaning you are not tied to it. You only speculate on the rise or fall of its share price.
CFD trading is no different from traditional trading in terms of strategies. A CFD investor can go long or short, set stop-loss and take-profit orders, and apply trading scenarios that align with their objectives.
All-round trading analysis: the browser-based platform allows traders to shape their own COIN stock analysis and forecasts with sleek technical indicators. Capital.com provides live market updates and various chart formats, available on desktop, iOS and Android, making it easier to analyse the fluctuations in Coinbase shares.
Focus on safety: Capital.com puts a special emphasis on safety. Licensed by the FCA, CySEC and NBRB, it complies with all regulations and ensures that its clients’ data security comes first. The company allows clients to withdraw money 24/7 and keeps traders’ funds across segregated bank accounts.