Coinbase Stock Lowest Point Since Launch Because Of “Boring” Bitcoin
Last Updated on 9 May 2021 by CryptoTips.eu
With all the hype around Coinbase’s IPO this past month, most of us have probably forgotten where it is trading now.
A look on the charts shows us that the crypto exchange’s stock ticker shows the lowest price it’s ever been. Why is that and is it a good (or cheap) buy at this point?
April madness
Whereas US sports mostly comes with March madness (because of basketball), crypto markets saw April madness this year because of Coinbase’s IPO. In the weeks before that event, Bitcoin rose to $65,000, its latest all-time-high, before trading sideways pretty much ever since.
So great was the hype around Coinbase and the conviction by the cryptosphere that this would change everything, that the period ever since has been somewhat of a letdown.
Coinbase hits record low as investors flock to Dogecoin, Binance 👀, the entire #dogearmy warned you @coinbase. #dogecoin
— TheDogeDaily (@TheDogeDaily) May 8, 2021
In fact, the Coinbase stock (listed as COIN) has since slid ever further down since opening day (some claimed a dump by the board of directors) and is now back to its reference price which Nasdaq had initially set. Given that it briefly topped $400 after it started trading at $381, everyone quickly spoke of a $1,000 price target. Instead of doing this, Coinbase has come down back to $250.
The problem for Coinbase is that most of its traffic comes from Bitcoin trades, but as the price of the biggest crypto coin has been stuck in a small trading range for weeks now (between $50k and $60k), Coinbase is seeing less revenue come in.
Other exchanges
Furthermore, investors are starting to also realize that other exchanges, such as Binance for example, actually offer a far larger array of coins and more perks for traders.
Edward Moya, senior market analyst at Oanda, claimed that:
What has really hurt Coinbase, now that their direct listing has taken off, you’re seeing expectations that other exchanges are coming on board.
There’s this belief this could be as good as it gets for Coinbase in the short-term.
Of course Wall Street will always find a silver lining. Given that Cathy Wood’s ARK fund is so heavily invested in Coinbase (next to Tesla and Bitcoin), her reputation is taking a hit. Everyone who said that Coinbase would become a dud is now getting free airtime on CNBC, Bloomberg and CNN.
Time will tell if they’re right of course, because remember what happened to Facebook stock in its first few months after the IPO (it dropped 50%). If in five years from now Coinbase trades at the same multiple as Facebook does 5 years after its IPO, Wood comes out as the greatest investor ever of course.