How To Invest in Coinbase

67% of retail investor accounts lose money when trading CFDs with this provider.

Investing in Coinbase – Exchanges Price Comparison

If you’re still unsure about what platform is suitable for you to invest in the Coinbase stock, then we’ll help you decide in this section what might work best for you.

How to choose which platform is best for your investment

It can be daunting to choose the platform you want to use for your investment. Things get more complicated when you’re a new trader. This is due to a large number of technical words and the different investments method. For instance, there are stocks, ETFs (exchange-traded funds), and CFDs. And as a trader, you should decide the best way you want to invest in Coinbase according to your experience and preferences. That being said, we’ll simplify these technical aspects of investing in Coinbase in plain language. Furthermore, we’ll choose which broker is best for investing in that particular method that you’ve picked.

Stocks

Stocks — or shares as it is also called —are one popular way to invest in Coinbase. Investing in the Coinbase stock means that you’ve bought a portion of the company. Once you buy the Coinbase stock, the shares will represent how much you own of the company. This is what brings one of the major benefits of investing in stocks — dividends. For instance, if you own 1000 shares of Coinbase, and the exchange platform decides to issue a 10% dividend, then your holdings will surge to 1100 shares. Dividends are also considered a bonus and companies issue them as means of sharing profits with traders on a quarterly or an annual basis.  Now the price of any stock is directly influenced by the release of new products or features from the company you’re investing in as well as the company’s performance. In other words, the decisions of the company decide its future and contribute to the surge or the plummet of the stock price. Nonetheless, since you’re an investor with the company and you’re a part-owner of it thanks to the shares you bought; you’ll have the right to influence Coinbase’s future moves by attending shareholders’ meetings. This is where you’ll have the voting right in the Coinbase shareholder meeting if you have the minimum amount of shares that the company defined. The more shares you have, the more votes you’ll gain access to and the bigger your influence will be.

CFDs (Contracts For Differences)

As a trader, you can invest in a company without buying its shares. This is called a CFD and it’s a short-term leveraged derivative contract. Typically, by investing in CFDs you’re speculating on the potential market fluctuation and gaining profit accordingly. Investing in CFDs allows you to earn a profit if your direction of the share price is correct. For example, if you speculate that the share price of Coinbase would increase, you’ll gain profit once that happens, and lose if it goes the other direction. However, investing in CFDs comes with major risks including The potential to lose your investment if a trade is liquidated. Still, with major risks comes to a major profit since investing in CFDs can be more profitable and faster than investing in stocks.

ETF (Exchange-Traded Fund)

Exchange-traded funds or ETFs for short are a type of security that can be sold on an exchange platform. Similar to mutual funds, ETFs enables traders to diversify their portfolios without going through the same daunting process that stocks follow.  Instead of trading a particular stock, trading ETFs allows you to gain profit from the total value of ETF shares. However, the differences between an ETF and mutual funds are that ETFs are traded on open markets like stocks and you’re not entitled to redeem shares with the fund in a direct way. Furthermore, you can invest in ETFs at any time — allowing for more flexibility with your trading strategy.

Which investment type to invest in Coinbase

By understanding the different ways you can invest in Coinbase, it’s now time to choose which one is most suitable for you. In the upcoming paragraphs, we’ll understand together how to match the type of investment with your strategy, preferences, and investment timeline.

Invest in Coinbase stock

Companies’ prices are influenced by their performance and the new releases of products or services to mention a few. Nonetheless, Coinbase stock price has another important factor. The stock price of Coinbase is heavily related to the surge of price and adoption of cryptocurrencies. Now both investments have potential on a long-term basis. That said, if you believe that Coinbase’s stock price will soar in the long term, then investing in its stock might be suitable for you. Additionally, if the company will be successful during the upcoming months or years, you can benefit from the dividends instead of liquidating a fraction of your investment.

Invest in Coinbase CFDs

If you aren’t comfortable with long-term investments and want to claim profit quickly, then investing in a CFD is the best option. But as we mentioned earlier, investing in CFDs can be a bit tricky, and risky. Contrary to stocks, investing in CFDs can result in losses that you can’t afford since you can lose more than your initial investment. As a side note, if you have an Islamic investment account, you won’t be able to invest in CFDs since it doesn’t comply with the religion’s Sharia laws.

Invest in Coinbase ETF

Investing in stocks or CFDs doesn’t seem like a great deal to you? If so, then you’ll have one final option that you can consider to invest in Coinbase. By investing in ETFs, you’ll minimize the risks compared to CFDs or investing in stocks. This is because ETFs give you more flexibility and diversification when it comes to investment. Mechanically, if a stock is plummeting, other stocks involved in your ETF investment might cover up the losses. However, Coinbase is included in several ETFs and if you’re basing your investment on an exchange platform then you should take into account the percentage that Coinbase’s stock represents in the total value of the ETF.

How profitable is investing in Coinbase

Coinbase is the first major crypto company to go public. The exchange platform stock price started trading at $381 on its IPO before it plummeted by 30% since then — as of this writing. Now despite the Coinbase stock being volatile, the fact the company is involved in a major disruptive innovation and gives it a huge advantage. Additionally, the platform has built a reputation of being secure, transparent, and flexible. Also, Coinbase has had stronger than expected results in the 2nd quarter of 2021 and its revenues have surged by 27% to $2.2 billion with 8.8 million monthly transacting users. It’s important to mention however that with the major crackdown of China on cryptocurrencies as well as the planned regulations by the U.S., you should take into account that this might negatively impact the price of the stock.

Cryptocurrency adoption is growing

Coinbase has positioned itself as a leader in the cryptocurrency market. In fact, the exchange platform is mainly associated with cryptocurrencies. It’s a no-brainer that the crypto market is growing exponentially and its adoption by major financial institutions is remarkable. Also, 6 countries have adopted Bitcoin and El Salvador has officially considered Bitcoin as a legal tender and started mining it using power generated from volcanoes. Therefore, Coinbase among several other crypto exchange platforms has more room to prosper.

The cryptocurrency market is volatile

The cryptocurrency market is highly volatile and the price of cryptocurrencies is unstable. This means that both long and short-term traders are always buying and selling cryptos. The more transactions happen in the market on Coinbase, the more profit the company makes. Consequently, with more earnings and profits for Coinbase, investors in the Coinbase stock will benefit. For instance, Coinbase’s average trading volume has surged by %142 to $193 billion in 2020, before it rose to $335 billion and $462 billion in the 1st and the 2nd quarters of 2021, respectively. 50% of the trading volume in the 2nd quarter was coming from Bitcoin and Ethereum, the two largest cryptos in the market.

The risks of investing in Coinbase

Investing in Coinbase — like investing in other stocks — can be risky. For instance, China is leading a major crackdown on cryptocurrencies and has closed the China-based second largest Ethereum mining pool in the world. Since then, the Coinbase stock was struggling to gain momentum. Additionally, regulatory bodies and watchdogs in both the U.S. and the U.K. have been sceptical about the cryptocurrency market and they might impose laws in the future that would cause both cryptocurrencies and Coinbase price to plummet.

Cryptocurrency regulations

Watchdogs across the world are regulating cryptocurrencies. One example is that the United States requires a surety bond or an equivalent amount in fiat currency for cryptocurrency exchanges within their jurisdictions. Additionally, then can provoke the scarcity of any asset by controlling it. Take for example gold which is restricted to import in many countries. These factors are a major influencer of the price of cryptocurrencies and since Coinbase is associated with digital tokens, it would contribute to a price plummet in the price of the stock.

China’s war on Bitcoin

China was the largest mining pool across the world. However, the Asian country has passed laws that restrict the use, mining, or trading of cryptocurrency. Additionally, China has also banned ICO (Initial Coin Offering). These actions have caused Bitcoin to instantly lose $500 of its value following the news. These kinds of actions have made investors skeptical about the future of cryptocurrencies and Coinbase is expecting to lose 1 million monthly transacting users on the 3rd quarter of 2021.

The SEC lawsuit against Coinbase

Coinbase was planning to release a new product called Coinbase Lend. The company was intending to launch the product this year to lend its users’ cryptocurrency deposits to borrowers. However, the U.S. Securities and Exchange Commission has shared a Wells notice (intent to sue) to Coinbase. The SEC argued that the product includes security and it needs to be registered first. The company’s stock price fell sharply following the news and it is unclear whether Coinbase is intending to launch it or not.

How to Invest in Coinbase with eToro

Even if you’re a new trader, investing in Coinbase on eToro can be the easiest process out there. The site hierarchy is simple and user-friendly, and the platform features are easy to understand. That being said, we’ve created a small guide for you to start investing in eToro in no time.

Step 1: Setup an eToro account

eToro is the go-to platform for both beginners and expert traders. This is because the platform is user-friendly and has advanced investment features. To register, you need to type eToro.com into your browser and click the “Join Now” before filling in the details.

Step 2: Account verification

After opening an account with eToro, you should upload a photo ID (driving license or passport) and a proof address (bank statement or utility bill). This is because the platform is regulated and should comply with data protection and money laundering laws.

Step 3: Fund your account

After the verification process, you need to deposit funds into the account by pressing “Deposit Funds”. Enter the sum you want to invest and click on “Deposit”. The exchange platform accepts different payment methods including credit/debit cards, bank transfers, and e-wallets (PayPal, Skrill, etc).

Step 4: Invest in Coinbase!

With the funds you deposited on your eToro account, you can start investing in Coinbase right away! Search for “Coinbase” on eToro’s search bar and press “Trade”. Define the amount you want to invest and click on “Buy”. Congratulations, you’re now a Coinbase investor.

Conclusion

It’s all done. By completing this detailed guide, you’ll have all the necessary tools and insights that would help you forge a path to become a successful Coinbase trader. Furthermore, by knowing some of the advantages and detriments of investing in Coinbase that we mentioned in this article, you’ll be able to know if investing in Coinbase is right for you and what type of investment suits you best. After detailed research about the best trading platforms, we’ve come to a conclusion that eToro is the easiest and the most secure platform to consider for investing in the Coinbase stock. However, if you’re not sure if you should go for Coinbase stock yet, you can take a look at our other articles about different stocks that might work best for you. Happy trading!

Best Broker to Invest in Coinbase – eToro

FAQs

Is Coinbase stock a good investment?

Coinbase stock is a good investment especially if you are familiar with the cryptocurrency market. This is because the company is one of the few that are directly associated with cryptocurrencies including but not limited to Bitcoin and Ether. However, it all depends on whether you’re planning to invest in the stock for the long-term or short-term.

Can Coinbase stock reach $1000?

Many investors want to know if Coinbase stock can reach the $1000 mark. This is because the Coinbase stock debut was extortionate. It is unclear whether or not the Coinbase stock can reach that mark, but with the cryptocurrency adoption from investors and countries, it is possible that the Coinbase stock reaches $1000 in the long-term.

How does Coinbase earn money?

Coinbase earns money by charging investors trading fees, credit card transaction fees, Coinbase’s Prime and Pro features subscription, interest from personal loans and referral fees among many other features.

About Rochdi Rais PRO INVESTOR

Rochdi Rais is a journalist at USA Herald. He has been writing about cryptocurrency, the stock market and finance for years. He has also helped several businesses with digital marketing and content strategy as a part of his role as a consultant for GLG.