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As Cryptocurrency Prices Rally, so Should Coinbase Global
Stock Analysis & Ideas

As Cryptocurrency Prices Rally, so Should Coinbase Global

Coinbase Global (COIN) operates a popular multi-cryptocurrency-trading platform known as Coinbase. I am bullish on the stock.

With Bitcoin recently having surpassed $60,000 — and even $65,000 on October 20 — some traders are seeking ways to capitalize on the crypto craze.

There’s more than one way to do this. Sure, you can hold BTC, but there are indirect ways to potentially cash in on the momentum in digital assets.

Consider the idea of owning a piece of a giant exchange, on which Bitcoin is heavily traded on a daily basis.

Moreover, it’s not just Bitcoin that’s being traded on the platform, as another up-and-coming crypto coin could greatly enhance Coinbase’s customer base. (See Analysts’ Top Stocks on TipRanks)

A Quick Look at COIN Stock

Would you believe that COIN stock could actually be considered a value stock?

Coinbase went public via a direct listing or direct public offering (DPO) on April 14 of this year.

COIN stock was assigned a starting price of $250 per share, but it almost immediately went above $300 on the stock’s first day of public trading.

Folks who chased after the price spike were soon punished, however. COIN stock sank to the $250 area in May, and stayed near there until early October.

Then, the buyers stepped in. COIN stock rallied throughout the month of October, and even jumped into the $330s on November 1.

So, finally, we’re starting to see some upward momentum in the stock. Yet, how would this be a value stock?

Surprisingly, Coinbase’s trailing 12-month price-to-earnings ratio is just 28.7.

Therefore, even with the recent rebound in the COIN share price, the valuation is quite reasonable at the moment.

Crypto Adoption Will Benefit Coinbase

It’s evident that the rising price of Bitcoin should provide a headwind to COIN stock.

After all, whenever the BTC price reaches a milestone like $50,000 or $60,000, the financial headlines focus on cryptocurrency.

That, in turn, creates interest in crypto trading, and that’s Coinbase’s main business.

As fellow TipRanks contributor Faisal Humayun mentioned not long ago, the number of global cryptocurrency users has increased to 300 million.

That figure was unimaginable just a few years ago, but here we are.

Meanwhile, as the global cryptocurrency adoption rate increases, that should allow Coinbase to expand as well.

Amazingly, Coinbase’s platform has at least 68 million verified users.

Clearly, it’s the go-to exchange for many people all over the world, and Coinbase’s brand-name recognition is extensive.

A Small Coin Gets Bigger

Don’t get the wrong idea — Coinbase’s future growth won’t only depend on Bitcoin’s adoption.

The platform allows its users to buy and sell multiple digital assets. Among them is a canine-themed coin that’s been in the headlines a lot lately.

Everybody and his or her uncle, it seems, has been talking about the Shiba Inu coin lately.

Maybe that’s because SHIB’s price soared from $0.0000008 to $0.000072, for a gain of hundreds of percentage points, during the past month.

That’s good news for long-term Shiba Inu token holders, of course. Yet, it’s also great for Coinbase and its shareholders.

With perfect timing, in mid-September, Coinbase permitted its users to trade the Shiba Inu coin.

It’s as if Coinbase’s management saw the writing on the wall, and knew that SHIB was about to take off.

Maybe it knew, or maybe it didn’t. Either way, all of the recent buzz about Shiba Inu should increase the adoption of cryptocurrency in general, as well as Coinbase’s platform in particular.

Wall Street’s Take

According to TipRanks’ analyst rating consensus, COIN is a Moderate Buy, based on 13 Buy, three Hold, and two Sell ratings. The average Coinbase price target is $355.56, implying 7.5% upside potential.

The Takeaway

As crypto becomes more popular, Coinbase is likely to increase its market presence and brand-name recognition.

Besides, COIN stock is showing positive momentum, but it is still a good value.

Disclosure: At the time of publication, David Moadel did not have a position in any of the securities mentioned in this article.

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