- COIN follows Bitcoin lower as things turn ugly.
- Bitcoin is down 7%, breaking $50,000 in the process.
- COIN is sharply lower again in Friday's pre-market.
Update April 27: Contrary to premarket trading, Coinbase Inc (NASDAQ: COIN) shares have been on the back foot in Tuesday's trading session. The stock of the cryptocurrency exchange company is changing hands at around $303.58. Nevertheless, the increase in Bitcoin's price may eventually push it higher. BTC/USD is hovering around $54,000, well above the lows.
Coinbase launched on Wednesday on the Nasdaq to much investor anticipation. The crypto sector has been one of the most revolutionary developments to financial markets this century as Bitcoin steadily inserts itself into the mainstream. Companies are increasingly making Bitcoin part of their future plans with Goldman Sachs, VISA, Tesla and others all getting on board. Coinbase is akin to an exchange, allowing users to buy and sell cryptocurrency. Soon after opening, its value exceeded that of some of the largest stock exchanges in the world, most notably the NYSE and Nasdaq.
Coinbase was founded in 2012 and has a near 12% share of the crypto market, according to regulatory filings, with 56 million users.
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COIN stock forecast
The latest results from Coinbase show just how tied the company's revenues are to the underlying crypto leader Bitcoin. As BTC doubled in price in the first quarter of 2021 so Coinbase's revenue has surged. COIN said revenue for Q1 2021 will likely be $1.8 billion versus $1.3 billion for the full year 2020.
As demonstrated in our last look at the technical chart picture, COIN has flagged up the dreaded DeMark 9 sell on the hourly charts. Given COIN is a new listing, we cannot use daily data as there just is not enough of it yet. Other indicators are neutral. The Relative Strength Index (RSI), Moving Average Convergence Divergence (MACD), and Williams indicators are all in neutral territory. Volume and volatility are low.
COIN opened with a gap lower on Monday based on Bitcoin's weekend fall. In doing so, COIN breached the Fibonacci 23.6% retracement from the opening day high to low. This is the first resistance should COIN turn bullish, $338.24.
Support comes at $310.22, the opening day low. This is the current target from the DeMark sell signal. Technical analysis is never an exact science, but particularly in a new listing with limited data, so caution and solid risk management should be the order of the day.
Previous updates
Update April 27: Coinbase Global Inc (NASDAQ: COIN) shares have recaptured the $300 line and closed at $304.54 on Monday, an increase of 4.4%. According to Tuesday's premarket data, shares are expected to extend their gains with another 1.5% to the upside. The biggest boost came from Tesla. Elon Musk's electric vehicle company said it made $100 million on its Bitcoin investment and sees more potential there. As a cryptocurrency exchange, Coinbase benefits from such a highly visible endorsement.
Update April 23: COIN shares continue to collapse as Bitcoin suffers sharp declines. Bitcoin is down 7% at the time of writing on Friday, trading at $48,166. COIN is as a result suffering further and is currently down 4% in the premarket at $282. The Moving Average Convergence Divergence (MACD) and Directional Moving Index (DMI) remain in bearish territory.
Update April 22: Coinbase Global Inc (NASDAQ: COIN) opened lower for the fourth straight day on Thursday and continues to have a difficult time staging a meaningful rebound. As of writing, COIN was trading at $304.90, losing 2.3% on a daily basis. Earlier in the day, Deutsche Boerse announced that it would delist COIN from the Xetra trading system and the Frankfurt Stock Exchange due to an error identified in the reference code. Although Deutsche Boerse later noted that COIN will remain listed as Coinbase has provided the correct information, this development failed to trigger a recovery. Meanwhile, Bitcoin is up more than 2% following Wednesday's sharp drop, possibly helping COIN limit its losses for the time being.
Update April 22: Etehreum (ETH/USD) has hit new highs above $2,550 and Bitcoin is recovering – yet the publically traded cryptocurrency exchange fails to benefit. Coinbase Global Inc (NASDAQ: COIN) has dropped to below $310 at the time of writing, extending its declines. One week after directly listing on the stock market, some hot air seems to come out of shares.
Update April 22: Coinbase Global Inc (NASDAQ: COIN) has been on the back foot, falling nearly 2.8% to close at $311.92 on Wednesday. After-hours data is pointing to a minor extension of that drop to $308.95 on Thursday. While Ethereum is trading higher – flirting with $2,500 – Bitcoin, the granddaddy of cryptocurrencies, remains on the back foot below $55,000. The cryptocurrency exchange's value is becoming more and more correlated with BTC. An uptick over the weekend may boost its shares.
Update April 21: COIN shares are under the microscope as investors take a closer look at the valuation metric. COIN was worth more than the NYSE and Nasdaq shortly after launch and more notably was close to the lead bank involved in its listing, Goldman Sachs. GS has a market cap of $113 billion and COIN was approaching this shortly after listing as the shares roared ahead. Investors have started to focus on how sustainable the COIN business model is given it is highly dependant on stable commission rates. Commission rates on trading shares have been falling for decades as have trading fees for commodities, futures, and bonds. Crypto is a market in its infancy by comparison but if the trend spreads across, COIN will not be able to maintain current margin and commission levels.
Update: COIN struggles for gains on Tuesday as the Bitcoin hangover continues. COIN shares are lower by nearly 1% early on in the session. Technically the chart still remains bearish with the DeMark sell signal still in place. COIN also broke support at $338.32, a Fibonacci retracement level.
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