Coinbase Global (COIN) has been rallying recently, with the stock near the $350 mark. As one of the most intriguing and convenient ways to play the broader cryptocurrency market, the question remains: should investors keen on gaining crypto exposure look to buy the breakout as the broader basket of cryptos holds strong? I am bearish on Coinbase. (See Analysts’ Top Stocks on TipRanks)
Indeed, Coinbase is one of the simplest methods of gaining exposure to the emerging space. It's a far better way than picking and choosing individual cryptocurrencies, especially given the propensity for some of the smaller, hotter ones to blow up.
The Squid Game cryptocurrency based on the popular South Korean Netflix (NFLX) hit show imploded in a matter of minutes, plunging to zero and wiping out millions.
Looking back, it's easy to tell oneself that they would have never got caught up in the hype, but what separates such a token from the likes of a Dogecoin, Shiba Inu, or any other cryptocurrency for that matter?
In any case, gambling activity in such tokens is a huge plus to Coinbase in any given quarter. In a way, Coinbase is also a great platform for those looking to use cryptos as a means of gambling.
Coinbase: A Better, Easier Way to Bet on Cryptocurrencies?
Even Bitcoin is tough to get behind, given the profound volatility surrounding it. While it is more widely embraced, with many years to prove itself as a store of value, I still think COIN stock ought to be a go-to play for most. Whether they be investors seeking to diversify their portfolios or speculators looking to make a quick buck off broader appreciation in the crypto asset class.
Although COIN stock is a great way to play crypto, I am not a fan of the uncertainties surrounding the asset class. Furthermore, the valuation of Coinbase as it nears its big breakout is far too rich at 14.4 times sales.
As such, I am bearish, but wouldn't dare bet against the stock, as cryptocurrencies could easily continue blasting off based on unpredictable exogenous events.
As long as the momentum in the crypto universe is present, traders and speculators will continue jumping aboard the Coinbase train. Just how long the hype will last is anybody's guess and Coinbase stock's most considerable risk.
Coinbase isn't just an exchange for popular cryptocurrencies. It's so much more. It also acts as a custodian and a broker. With all the horror stories about lost keys and wallets, the importance of reliable asset custodians has been realized by many getting into the space.
Indeed, Coinbase is a great way to obtain broader exposure to the crypto markets. You could view the company as akin to some crypto index fund. Just as a bet on an S&P 500 index fund is a bet on corporate America, a bet on Coinbase stock is a bet on the broader cryptocurrency market.
If cryptos fumble, so too will COIN stock. Still, if crypto continues its momentum, there's no telling how much higher Coinbase can fly, as more investors embrace the asset while the company continues building upon its own strengths.
The Coinbase brand is also one that many can trust in a market that's full of unknowns. The leading American cryptocurrency exchange can hold its edge, even as rivals look to take share.
Wall Street's Take
Turning to Wall Street, COIN stock comes in as a Moderate Buy. Out of 17 analyst ratings, there are 12 Buys, three Holds, and two Sell ratings.
The average Coinbase price target of $355.56 implies just 1.4% upside potential. Analyst price targets range from a low of $160.00 per share to a high of $500.00 per share.
The Bottom Line on Coinbase Global Stock
Pending a vicious crash for the broader cryptocurrency market, Coinbase stock seems like a great name to trade. At these valuations, though, investors must be aware of the downside risks, as cryptocurrencies can be quite cyclical in nature.
Any drastic drop-off in trading volumes would not bode well for COIN stock or anything cryptocurrency-related. While COIN stock is my favorite way to play the crypto world, I can't say I'm enthused by the space at these heights. For that reason, I'm staying on the sidelines for now.
Disclosure: Joey Frenette doesn't own shares of any mentioned companies at the time of publication.
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