Cryptocurrency exchange Coinbase is a stock I will be watching in the coming weeks for a potential buy point. Just as AOL was a gateway for new users to the internet in the mid-1990s, and Charles Schwab was a innovator in online trading in the late 1990s, I believe Coinbase has the potential to play a similar role in our present time. While other exchanges such as Gemini are gaining popularity, Coinbase is by far the most well-known cryptocurrency exchange, and the one that comes to mind when new users seek to open a position in Bitcoin, Ethereum, or another cryptocurrency.
As Bitcoin and Ethereum continue to rise, more and more users are likely to desire to own these and other cryptocurrencies. As this happens, Coinbase will see increased revenue through transactions fees. Recently, we have seen crypto-related stocks such as Square rally strongly. This bodes well for Coinbase and other crypto-related stocks. While there was a huge interest in buying COIN as it had its' initial public offering, this actually coincided with the top of Bitcoin. For me, I prefer to never trade a stock on the day of its' IPO as there is just too much hype. However, that does not mean I won't take a look at a recent IPO after the hysteria has died down. It is very likely the majority of weak hands have either been shaken out or tired out as COIN declined from $420 to $210 over the past few months.
Fundamentally, Coinbase has posted some very strong numbers this year, reporting triple-digit earnings and sales growth last quarter. In addition, it has seen an increase in fund ownership. That combined with continued large ownership by insiders proves many on Wall Street are bullish on Coinbase's future.
It is important to note that COIN reports earnings this week, which means it is likely to experience increased volatility. In addition, it is also wise for those like myself who own Bitcoin and Ethereum to note the strong correlation between cryptocurrencies and COIN as it can be very dangerous to have too much money at risk in one sector.
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Full Disclosure: I currently own Ethereum and Bitcoin.
Full Disclosure: This post contains an affiliate link to Coinbase.
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