HomeCryptoCoinbase (COIN) amid risks and the future

Coinbase (COIN) amid risks and the future

There was a time when Coinbase (COIN) was not only the largest US exchange but also the first in the world, but with the passage of time others stole the lead because of the variety of tradable tokens and lower fees. 

Coinbase has not stood idly by and has taken a different path from all other exchanges namely that of listing on the exchange, which entails the submission of periodic financial statements and earnings in addition to being subject to close scrutiny by regulators, above all the SEC. 

Not only crypto for the US exchange giant but it has also decided to pursue the Wall Street path with a prolific 2021, a 2022 reversal and there is speculation of a 2023 marked by a rebound. 

Meanwhile, the so-called Whales are taking a bearish position on Coinbase Global and according to Benzinga‘s data, there are 26 trades of uncommon options. 

Institutional investor sentiment is 42% bullish and 57% bearish.

Of the 26 options above, however, 17 are puts, for $1,458,624 and 9 are calls for $515,473. 

The price range the whales are targeting appears to be between $2.50 and $300.00 for Coinbase Global in the quarter just ended.

The performance of Coinbase (COIN) on the stock exchange

COIN depreciated 4.13% to $33.93 with volume of $5,081,033 and RSI indicators give Coinbase Global close to oversold with future 51-day gains.

According to some analysts, Coinbase could recover value this year by returning to growth thanks to boomerang capital from investors who disappeared after the FTX inferno and who now feel safer entrusting their Wallets in the hands of more controlled exchanges.

In 2022, Coinbase lost almost 95%, obviously much more than traditional exchanges suffering from high fees. 

However, Coinbase is safer and is the only Exchange as well as one of the four companies in the crypto world verified by one of the big four. 

Classic currencies (fiat) are showing the rope of trust with institutions and central banks increasingly hit by scandals so it happens that investors feel safer in the hands of companies like Coinbase that give high indirect coverage from economic, social or political destabilization.

Bitcoin (BTC-USD) and similar brought home poor performance in 2022, the scandals of FTX, Terra Luna, etc. certainly did not help but rather contributed to widening losses as well as increasing fear among investors. 

Coinbase (NASDAQ: COIN) in New York lost 86% of value in the year just ended while short interest is at 24%.

COIN has become a proxy investment for Bitcoin with a beta ratio close to 1, meaning that every 1% change in BTC will correspond to a rise or loss in COIN by the same percentage.

Coinbase is for all intents and purposes a financial institution but unlike banks it is not subject to the same rules and especially the same cash reserve as collateral. 

Although the stock is a high-risk stock it is cheaper than it used to be and being subject to short selling all paves the way for short-term gains for investors.

Critical issues for Coinbase remain and are attributable in part to investor fud toward the crypto world due to solvency risks, business risks, and a likely worsening of the regulatory environment. 

Smaller in size and offering than the more emblazoned Binance, Coinbase is also more expensive in terms of fees but in its favor boasts the higher “trust score” precisely because of the fact that it is a public company.

Coinbase has high leverage and much less liquidity for the assets it has and that is around $110 billion.

However, the higher fees combined with the regulators’ controls and audit activity make Coinbase a safe haven in the eyes of investors and it is increasingly considered bullish by analysts for 2023. 

COIN discounts any fears and problems with a value that has lost 95% in a single year in the crypto market coupling with a counter valuation that is too high compared to traditional brokers. 

COIN’s risk profile has already been discounted in its current value and if we take it for granted that the crypto world will not disappear it could come back to erode market share from the various Binance and Kraken and become a leader again. 

With traditional finance in crisis the longevity of the crypto world can only benefit and ward off the bogeyman of volatility with digital currencies that will hold their value longer over time.

According to financial analyst Harrison Schwartz:

“COIN is a potential hedge against generalized social, political, and economic risks.

Once cryptocurrency volatility settles down and Bitcoin carves a more stable support level, I may become very bullish on COIN.”

George Michael Belardinelli
George Michael Belardinelli
A former corporate manager at Carifac Spa and later at Veneto Banca Scpa, blogger and Rhumière, over the years he has become passionate about philosophy and the opportunities that innovation and the media make available to us, in particular the metaverse and augmented reality