The recent Bitcoin rally has helped the stock price of Coinbase (COIN). The stock price of Coinbase (COIN) has recovered in the past few weeks, helped by recent Bitcoin gains. The stock is still in deep correction, having fallen by more than 27% since its peak this year.
Coinbase loses market share
Coinbase, which is the largest cryptocurrency exchange in America, has lost market share to companies such as OKX, Crypto.com and Bybit. Data from CoinMarketCap, for example, shows that Coinbase processed $1.7 billion worth of cryptocurrencies in the US on Saturday while Binance handled $14.1 billion.
Bybit traded $4.6b worth of goods, while OKX dealt with $2.07b. HTX and Gate.io handled $1.8b each, as did Crypto.com.
The main reason for this performance is the increasing market share of meme currencies like Turbo, Cat In A Dogs World, and Popcat. Coinbase, in most cases, is one of the very last exchanges that list tokens like these, which are now the most sought-after assets on the market.
Coinbase has also a lower market share on the derivatives markets. Binance’s volume on the spot market was $14.1 billion, but its derivatives business stood at $47.3 billion. Bybit dealt with $19 Billion, OKX handled $19 Billion and Bitget $18.9Billion.
Coinbase also faces the risk of a highly saturated exchange market. CoinMarketCap monitors 103 exchanges that offer derivatives, and 251 other exchanges which provide spot tokens.
Coinbase diversifies its business
Coinbase, on the other hand, is trying to diversify their business. This will help them become more resilient.
Its custody business has seen the most significant diversification, with it becoming the largest crypto-custodian industry.
SoSoValue data shows that Coinbase is the custodian of Bitcoins valued at over $50 billion by companies such as BlackRock, Ark Invest Bitwise and Grayscale. The company is also the largest custodian of Ethereum ETFs.
Coinbase earns money from a custodial charge on all the assets it holds. This business has the advantage of being highly reliable and almost forever because ETFs are always available.
Base Blockchain is the other part of Coinbase that’s often forgotten, but has grown to be the most important player in the blockchain industry.
Base Blockchain, a layer-2 blockchain, is designed to boost the Ethereum network. Ethereum is notorious for its high transaction fees and low speed.
Base, launched in 2023, has now 373 DeFi-based dApps. There are also 1.09 millions active addresses and $2.42 billion worth of total value locked.
Base is now the third largest player in the industry of decentralized exchanges (DEX). The data shows that Base’s DEX network handled $6.62 Billion in transactions over the past seven days. It is second only behind Solana.
Base Blockchain doesn’t make significant fees. Base Blockchain has earned only $61 millions in fees so far this year. Ethereum, on the other hand, has generated $2 billion.
If Coinbase decides to release its own token, Base could become even more valuable. Theoretically, Base should have a higher value than Cardano. Cardano is a ghost blockchain valued at more than $12 billion. Cardano, while well known, has nothing going on. Cardano, for example, has only $196 millions in TVL and its DEX network have no volume.
Base’s valuation can be best compared to other large layer-2 networks. Arbitrum is worth $5.12billion fully diluted, while Optimism has an estimated value of $6.7billion. Polygon’s FDV is $3.26 Billion. Base’s valuation is likely to be around $7 billion, as it is larger than Optimism, Arbitrum and Optimism.
Bitcoin earnings and price movement
BTC Chart by TradingView
Bitcoin is the next catalyst for Coinbase’s stock. The coin’s price is likely to make a comeback, as it formed a cross with its 200-day Moving Average (WMA), and the 50-day WMA crossing.
Bitcoin also has an inversed head-and-shoulders pattern and a widening wedge, which point to a recovery. The most important thing to remember is that November is typically Bitcoin’s strongest month. This means a possible rebound. Coinbase does very well when Bitcoin’s price is on the rise.
You can read more about the chance of Bitcoin reaching $100,000 by year-end at less than 10%
Other catalysts include the American elections and the Federal Reserve’s interest rate reductions.
The stock of Coinbase will react as well to the earnings report on October 30. Analysts anticipate that the revenue will have increased by $1.2 billion or 85% year-over-year. It is expected that its revenue for the year will be $5.6 Billion.
There are increasing odds that Coinbase’s stock will surge and test the resistance level of $272, which was its peak on July 23, a rising indicator. Bitcoin’s recovery will be the key to this rebound. It must reach a new record high.
The post is Is Coinbase stock worth buying or selling ahead of Q3 earnings. This post may change as new information becomes available
