Coinbase Global (NASDAQ:COIN) is a big part of something truly large, at the intersection of what Wall Street is saying and doing. Buying COIN stock looks ready to become a profitable investment for the masses.
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Lumber. Housing. Collectibles of all kinds. The stock market. In what many are viewing as a fast-unfolding new Roaring 20’s not unlike what followed the Spanish Flu, nowhere is investors’ collective risk-taking better embodied than in digital assets.
There is of course trillion-dollar plus decentralized finance (DeFi) giant Bitcoin (CCC:BTC-USD) as evidence of possible froth. Today, only the dollar and euro are larger currencies in terms of circulation.
Likewise, there’s the crypto market’s second-largest play, Ethereum (CCC:ETH-USD). Out-the-gate this week, the asset sometimes referred to as the world’s computer is soaring to its sixth-straight week of record highs. And COIN has certainly been a part of that of the aggressive and perhaps even over-the-top feeding frenzy. Well, kinda sorta.
Let’s take a look at shares both off and on the price chart, then offer an aligned and risk-adjusted determination for COIN investors.
COIN Stakes Biggest Crypto Platform
COIN stock is a stake in is the largest crypto platform in the U.S. And in mid-April Coinbase Global made its Nasdaq debut as a publicly traded company vis-à-vis a direct listing priced at $250 a share. According to Wedbush’s Dan Ives, “Coinbase is a foundational piece of the crypto ecosystem and is a barometer for the growing mainstream adoption of Bitcoin and crypto and window into the future.”
Others such as Leeor Shimron at FundStrat Global Advisors likened COIN’s direct listing as a watershed moment for the crypto industry. But for Coinbase investors in the secondary market, COIN has been more of a lesson in digging holes than a groundbreaking, seminal investment.
Still, those analysts may have it right. A week prior to its direct listing, Coinbase announced soaring revenues, up nearly 850% year-over-year on sales of $1.8 billion. The exchange also confirmed 56 million users, more than 6 million of those accounts making transactions monthly and impressive trading volume of $335 billion during Q1. To say the least, the results bullishly hint at more opportunistic days ahead for COIN stock.
Backing that more upbeat assessment, today’s investors also have technical pattern support to lean on, alongside help from Coinbase’s options market.
Coinbase Weekly Price Chart
Source: Charts by TradingView
As inferred above, Coinbase has been a challenging exercise for investors whose COIN stock buying campaigns began after the exchange operator’s debut. An opening price of $381 and more than 50% above the stock’s direct listing jumped to nearly $430 that same day. But that was as good as it got and only briefly at that.
COIN finished its Nasdaq debut at $328.28 which quickly put most shareholders purchasing the stock underwater. Today those accounts and many others are deeper in the red. Finally though, and as a result of that retreat, there are reasons for investors to consider long exposure to Coinbase.
Second Chances
This past Monday and following a new low of $282.07 COIN gapped higher to confirm the completion of a seven-day pullback formation. Shares didn’t go far, but narrowly higher prices the next session did set the stage for a second smaller four-day price consolidation.
Today, that pattern has signaled its own pivot low while holding COIN’s 76% retracement level. In our estimation — and if we’re to believe in observable second chances — Coinbase is looking bullish.
Bottom-line, the price action could be the start of something much bigger for investors. There aren’t any guarantees of course. At this point we can only hope one day Coinbase turns into the kind stock which could make Apple (NASDAQ:AAPL) green with envy.
Never say never, right? Just in case though, for all those other possible outcomes and given everything happening off and on the price chart, a fully-hedged and very flexible June $310/$340 collar is one smart way to begin executing in COIN stock more strategically today.
Stocks owned: On the date of publication, Chris Tyler holds, directly or indirectly, positions in listed Grayscale Bitcoin and Ethereum stocks (GBTC, ETHE and ETCG), but no other securities mentioned in this article.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. The information offered is based on his professional experience but strictly intended for educational purposes only. Any use of this information is 100% the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.