Bitcoin’s run to $40k set the Coinbase stock price free of its recent range. The rally has since faded as investors weigh COIN’s long-term prospects.
Coinbase Global inc (COIN:NASDAQ) closed at $232.21 down $6.89 (-2.88%)
They say ‘timing is everything, and that certainly rings true for investors in COIN. Not only was the 14th of April the first day of trading in the stock, but also memorable as the day Bitcoin reached its all-time high.
Sadly the comparisons don’t stop there. Bitcoin is now trading -37% below its record. At the same time, COIN has dropped 46% from its $429.54 debut day high.
Clearly, the US-Based cryptocurrency exchange fares better when Bitcoin prices rise. BTC is the most traded product on the platform, and therefore, when Bitcoin falls out of favor, exchange revenues suffer.
So when the Bitcoin price finally reclaimed the $40,000 this week, it made sense that COIN would follow.
However, BTC’s positive momentum has stalled. As a result, so has the Coinbase Stock price.
Without a buoyant crypto market to lead the stock higher, investors will remain cautious about COIN’s prospects. And rightly so. Concerns over increasing competition led Investment bank Raymond James to issue Coinbase’s first ‘underperform’ rating last week.
The 30-minute price chart shows that on Monday, COIN broke out of a pennant formation. The impulsive move higher cleared resistance at $230. This former resistance now becomes the first level of support.
Should the price fail to hold this level, it would target the 8th of June low at $217.70.
Monday’s rally topped out $10 short of the psychological $250 barrier. Therefore, $240 is seen as a resistance level ahead of $250.
I’m indifferent to the Coinbase stock price at current levels. The best course of action is to wait for a clear trend to emerge in cryptocurrencies before taking a position in COIN.
Follow Elliott on Twitter.
