Coinbase Global (NASDAQ: COIN) stock is getting closer to its all-time low and key support level of around $220.
With recent news of ARK Invest’s Cathie Wood topping up her stake, shares of the leading cryptocurrency exchange platform haven’t looked this attractive in quite a while. For those who’ve yet to expose their portfolios to Bitcoin or the broader basket of cryptocurrencies, Coinbase stock seems very interesting here.
Although Wood is bullish, with her latest round of dip-buying, it is worth noting that her strategy of doubling down on fast-falling losers, especially Coinbase, has been quite mixed of late.
Further, most self-guided investors may be far less risk-tolerant than Wood. Many beginner investors do tend to overestimate their ability to take risks, after all. Wood’s incredibly aggressive investment strategy led to sub-optimal results for 2021.
Still, she’s not one to fold on her innovation-fueled investment mindset just because most others are in the face of higher rates. I am bullish on COIN stock, but acknowledge the risk that my call could be wrong in a big way.
Coinbase Stock Testing Floor of Support
Coinbase stock, now off 32% its high to $243 per share at the time of writing, has a good shot at holding its support. If it doesn’t though, investors had better brace for impact, given the potential for the cyclical cryptocurrency trade to reverse violently hand-in-hand with broader stock markets.
Bitcoin and other cryptos have gone bust many times in the past, and all things associated with cryptocurrencies went down with it. That’s the real risk in Coinbase, even though it is arguably one of the best-run firms in the crypto space.
Simply put, the degree of systematic risks involved is incredibly high. As such, investors should only follow an investor like Cathie Wood into such a name if they’re looking for further diversification with exposure to the crypto asset class.
Skeptics Embracing Crypto
As Bitcoin goes more days without imploding on itself, more skeptics and big-league money managers are likely to give in and buy some cryptocurrencies.
It’s not because cryptocurrencies provide a means of getting wealthy over a short duration of time. Rather, the asset class is finding a spot in the portfolios of prudent investors, as opposed to speculators or hardcore crypto fanatics. As more investors continue embracing it as a means of value storage, the case for crypto, notably Bitcoin replacing gold, seems to be getting stronger.
Bitcoin and gold share many similarities. Thus far, Bitcoin has been a far better alternative asset in the face of higher inflation. With interest rates likely to rise, the case for owning gold over Bitcoin or any other cryptocurrency-related firm seems to weakening. Indeed, gold doesn’t perform the best in a rising-rate environment.
In any case, as Bitcoin stays elevated, it may very well prove that crypto represents a profound paradigm shift in the financial world, rather than just an irritating bubble just waiting to burst.
Promising Trends in Crypto Space
As more investors look to buy their first cryptos, Coinbase will be hard to stop. Coming off a tough Q3, the stock seems in great shape to come roaring back, not just from a technical perspective, but from an environment that could continue favoring crypto over precious metals as the superior store of value.
Although it will take time, a growing number of merchants are beginning to accept top cryptocurrencies as a means of payment despite their extreme levels of volatility.
This trend in the broader crypto markets bodes well for exchange platforms, most notably Coinbase.
Finally, NFTs (Non-Fungible Tokens) could shift from abstract speculation and buzzword to something that’s more investible once the metaverse gets big. Indeed, NFT Stocks could really get a jolt at some point over the next decade, as buying unique digital assets becomes more justifiable by broader audiences.
Wall Street’s Take
According to TipRanks’ consensus analyst rating, COIN stock comes in as a Strong Buy. Out of 15 analyst ratings, there are 13 Buy recommendations, one Hold recommendation and one Sell recommendation.
The average Coinbase price target is $406.33. Analyst price targets range from a low of $160 per share to a high of $600 per share.
Disclosure: Joey Frenette doesn’t own shares of any mentioned companies at the time of publication.
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