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Coinbase Stock: The Best Bet for Crypto Exposure?
Stock Analysis & Ideas

Coinbase Stock: The Best Bet for Crypto Exposure?

Shares of top cryptocurrency exchange platform Coinbase Global (COIN) have been choppy right out of the gate when it went live just under a year ago. Indeed, cryptocurrencies by nature are incredibly volatile, with Bitcoin, Ethereum, and other less-established digital tokens that are even more volatile.

As Coinbase evolves from a leading exchange to a more diversified player in the crypto universe, there’s a lot of growth to be had. Much of Coinbase’s growth prospects may be difficult to fathom for investors and analysts.

Coinbase: High Risk, Higher Reward

Indeed, Coinbase is well-equipped to broaden its focus, as many innovators in Silicon Valley did in 2021 (think Block (SQ) and Meta Platforms (FB)) to encompass a wider range of intriguing blockchain technologies. Undoubtedly, taking such a step back to broaden one’s focus can open new windows of opportunity. Given Coinbase’s agility to pivot and adapt to the fast-changing crypto world, I favor it over owning cryptocurrencies like Bitcoin.

As Coinbase stock sinks towards its technical support level again, I remain bullish on the stock. Though, investors should be ready to average down since COIN stock is likely to be as volatile as ever in 2022, given recent choppiness in the crypto markets.

Coinbase Stock: Still One of the Best Bets for Crypto Exposure

Those looking to get into the cryptocurrency markets for the first time should seek to dip a toe or foot into the unchartered waters rather than looking to make a huge splash.

Cryptocurrencies are slowly and steadily being embraced by a broader audience of both established investors and well-known retailers. That said, broadening adoption doesn’t necessarily pave the way for the jaw-dropping type of demand we experienced over the past two years.

The crypto markets can be pretty cyclical. If you can’t stomach your investment shedding over 70% of its value, you may be overexposed to the asset to get any diversification benefit.

There are few, if any, places to expose yourself to crypto without having to deal with such off-the-charts volatility. There are a growing number of ways to play the crypto markets, ranging from exchanges to Bitcoin ETFs and crypto miners to actual cryptocurrency through a wallet.

Crypto exchange play Coinbase stock is arguably one of the better (and simpler) ways to obtain crypto exposure for newcomers to the space. It’s a leading exchange and will benefit from the longer-term trend at play, which is the broader adoption of cryptocurrencies.

That said, Coinbase stock is still not immune from the choppiness that comes with the crypto territory! As such, new investors must understand the downside risks before getting into a name like Coinbase, which could sour in a hurry as it follows the footsteps of the broader crypto markets lower.

The Main Reason to Prefer Coinbase Stock over Actual Cryptocurrencies

Coinbase goes above and beyond just digital tokens. It offers a wide range of other services, including digital asset custodianship. What should have investors most excited, though, is the company’s ability to stay at the forefront of crypto and blockchain innovation. In a way, Coinbase is a more future-proof way to expose yourself to the blockchain world, a rapidly-changing market.

Coinbase NFT and investments in blockchain infrastructure are growth pathways that could really pay off in a few years, even if the magnitude of cryptocurrency trading were to fall and taper in a crypto cyclical downturn.

For now, cryptocurrency fluctuations and trading activity will be the primary movers of COIN stock. A few years down the road, though, Coinbase could emerge as a go-to blockchain innovator. If it can remain on the cutting edge of innovation, I’d argue that its sensitivity to crypto fluctuations could decrease drastically.

Wall Street’s Take

Turning to Wall Street, COIN stock comes in as a Strong Buy. Out of 14 analyst ratings, there are 12 Buys, one Hold, and one Sell.

The average Coinbase price target is $406.79, implying 66.5% upside potential. Analyst price targets range from a low of $160.00 per share to a high of $600.00 per share.

The Bottom Line on COIN Stock

Like anything related to crypto, Coinbase stock will not be for everybody. Venturesome investors with a stomach for downside and an understanding of the long-term opportunities at play may wish to average their way into the stock over coming quarters.

There are many opportunities to be had with the crypto exchange platform, which is slated to take a step back and become more of a fintech company with a heavy blockchain focus. With high-growth stocks, you’re betting on attractive stories that could lead to massive profitability down the road. In terms of stories, it’s tough to top that of Coinbase’s.

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Disclosure: Joey Frenette doesn’t own shares of any mentioned companies at the time of publication.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates  Read full disclaimer >

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