Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge. When he's not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
Coinbase stock is rising as Bitcoin soars. The major exchange also wants to buy Latin America’s largest crypto brokerage.
American crypto exchange Coinbase (NASDAQ: COIN) saw its stock surge on Monday, coinciding with a rally seen among several digital assets. These include Ether (ETH), Cardano (ADA), Solana (SOL), and most especially Bitcoin (BTC), which has recently been on the rise. Coinbase stock (COIN) climbed 7% during pre-trading in New York, while Bitcoin advanced 6.5% over the last 24 hours and surpassed $48,000.
Bitcoin has now hit a price threshold not seen since early January. It has also added $10K over the last two weeks. In addition, BTC’s recent price uptick has now erased double-digit year-to-date losses for the leading crypto. Meanwhile, analysts see even more room for gains.
According to analysts at Goldman Sachs, Coinbase stock closely mirrors the movement in Bitcoin’s price. Because of this price correlation, technical factors indicating future BTC price increase also suggest a rise in Coinbase stock.
Also weighing in on the price relationship between COIN and BTC, Marcus Sotiriou, an analyst at digital asset broker GlobalBlock (BLOK) said:
“Bitcoin is facing heavy resistance, but if it is able to hold above the $46,000 level (which roughly marks the yearly open) for several days, I expect a move to $52,000, which is the next key resistance.”
Volatility Could Still Be a Major Influencing Issue Between Coinbase Stock & Bitcoin Price Correlation, According to Analysts
Despite the positive optics for Coinbase’s stock as a result of positive BTC price movement, analysts still advise caution. This is because shares in the crypto exchange still remain down 20% so far in 2022. As a result, the stock performance expectation of COIN is considerably lower at $314 as of March. At the end of 2021, COIN traded at $395.
Another reason for the reduced expectations of Coinbase’s stock performance is due to the volatility of BTC. According to Citi analyst Peter Christiansen in a note released last week, “our estimates and target price rebase lower following the recent volatility in digital asset prices, as well as the company’s plan to accelerate scale via a sizable investment ramp in 2023.”
Christiansen also suggested that Coinbase stock may still take on a more bullish nature beyond the influence of BTC price. He added:
“While recent crypto volatility has likely hampered transaction activity [year-to-date], we assume strong Subscription and Services growth … improving the revenue mix in 2023.”
The positive development in Coinbase stock also comes amid reports that American crypto exchange is looking to make a key acquisition. According to The Motley Fool, Coinbase is close to securing a deal to buy Latin America’s largest crypto brokerage, Mercado Bitcoin. First reported by Bloomberg, the deal is for Coinbase to buy 2TM, a Brazilian unicorn holding company with a controlling interest in Mercado Bitcoin. Expectations are that Coinbase will close the deal with 2TM in April.