COIN Shares of Coinbase Increase by 8.59% and Open the Door for Crypto Gains
Yesterday, shares of Coinbase (COIN) experienced an 8.59% increase, reaching a crucial level on the price chart against the dollar. After a successful 2023, followed by a disappointing start to 2024, the bulls are making their presence felt in the crypto market. Alongside the rise of Bitcoin (BTC), COIN now has the potential to achieve a new annual high by mid-year. However, Coinbase faces new challenges with the introduction of Bitcoin spot ETFs.
Coinbase Shares Rise and Set Stage for Crypto Gains
Coinbase shares saw an 8.59% increase following Bitcoin’s rally in the crypto market. In 2023, COIN experienced a remarkable 390% increase after two negative years post-IPO. However, COIN started 2024 with a correction, dropping from $175 to $118 in January. Now, Coinbase is entering a recovery phase, with bulls driving demand after a positive candle on Wednesday. It’s crucial for COIN to reclaim the $135 level by today’s Nasdaq market close to increase the chances of continued bullish momentum next week. If successful, COIN could reach resistance at $160 and surpass new highs above $185.
The Challenge for Coinbase with Bitcoin Spot ETFs
Coinbase is facing new challenges as it tries to maintain its strong financial position in the crypto market. The recent approval of spot ETFs in the US presents both opportunities and risks for Coinbase. The launch of these ETFs could potentially reduce Coinbase’s revenue from cryptocurrency purchase fees since these investment products offer more favorable fees compared to Coinbase’s charges of 1.5% to 4%. However, Coinbase acts as custodian for 8 out of the 11 approved Fund Managers by the SEC, earning a commission on traded volumes and additional fees for crypto asset storage. The impact of these new funds on Coinbase’s stock market remains uncertain.
Impact of Bitcoin ETFs on Coinbase
The netflow trend of these ETFs, including outflows from Grayscale and inflows from BlackRock, Fidelity, and Ark, will determine the path of Coinbase and its stock. The more BTC stored by ETFs, the more commissions Coinbase earns, while also locking up more circulating supply in the market. This could lead to a rise in Bitcoin prices and increased market volumes, ultimately boosting profits for Coinbase. However, the overall impact will depend on various factors, including the reduction in Bitcoin supply due to halving. If positive trends continue, COIN could experience significant growth.
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