Coinbase Global Inc. has emerged as a standout performer, witnessing a remarkable 62% rally
In the tumultuous landscape of the cryptocurrency market, Coinbase Global Inc. has emerged as a standout performer, witnessing a remarkable 62% rally in its shares this month. This surge is capturing the attention of Wall Street, particularly in the wake of challenges faced by other major players like FTX and Binance. As traders seek refuge from the uncertainties surrounding competing platforms, Coinbase’s stock is on a meteoric rise, propelled by optimism around potential business influxes, particularly if regulatory authorities greenlight Bitcoin-focused exchange-traded funds (ETFs).
Tripling in value in 2023
The year 2023 has proven transformative for Coinbase, with its stock more than tripling in value. Notably, November has contributed significantly to this rally, adding an impressive $12 billion to the company’s market value. The shares have surpassed $120 each, exceeding the average analyst price target of approximately $84. This surge is noteworthy, considering the broader market conditions and the crypto industry’s challenges in 2022 and 2023.
Amidst legal reckonings and regulatory scrutiny faced by its competitors, Coinbase has weathered the storm. Analysts like John Todaro from Needham & Co. highlight that Coinbase is now in a better position than ever as a public company. The recent legal issues surrounding FTX’s Sam Bankman-Fried and the settlement of a major dispute with Binance have cleared regulatory uncertainties, creating a positive environment for Coinbase.
Optimism for Bitcoin ETFs
The anticipation of approval for US-listed Bitcoin ETFs by the US Securities and Exchange Commission adds to the positive sentiment surrounding Coinbase. Bitcoin’s significant surge in 2023, approaching 130%, further contributes to the optimism among traders and investors. For Coinbase, this represents a potential uptick in business and market dominance.
Despite posting seven consecutive quarters of losses, Coinbase has demonstrated resilience and adaptability. Investors who bet against Coinbase have faced paper losses of $1.3 billion in the past month, underscoring the prevailing optimism. The company’s survival amid challenges positions it as a strong player in the evolving crypto landscape.
The recent legal issues faced by competitors have inadvertently benefited Coinbase. Sam Bankman-Fried’s fraud conviction and Binance’s settlement with the US Department of Justice have removed significant uncertainties from the crypto market. Oppenheimer & Co. analyst Owen Lau notes that Binance’s ability to continue operations is a positive development for the entire industry and, consequently, for Coinbase.
As Coinbase gains momentum, questions arise about the sustainability of this bullish trend. Wall Street analysts exhibit a mix of opinions, with over 40% maintaining a hold-equivalent rating for the company. Despite recent sales of Coinbase shares by major holder Ark Investment Management LLC, the general sentiment remains positive. As the crypto market potentially takes a breather, the prevailing belief is that Coinbase is still in the early innings of a new bull cycle, according to Needham’s Todaro.
In conclusion, Coinbase’s impressive performance in 2023 amid the challenges faced by its competitors positions it as a resilient force in the cryptocurrency space. The ongoing surge in its stock reflects renewed confidence from traders and investors, signaling potential sustained growth for the company in the evolving crypto landscape.