2022 has not been a good year for investors in the financial markets. Not only cryptocurrencies came under heavy pressure, but also stocks. The American NASDAQ Composite, in which more than 3,000 companies are listed, saw a correction of nearly 35%.
For the stock market, which is less volatile than crypto, this is a notable correction. And some of the listed stocks have been hit even harder. This also applies to Coinbase stock, one of the largest crypto exchanges in the world.
Coinbase Stock Suffers From Crypto Bear Market
Last year, when Bitcoin & Co. prices hit new all-time highs, the company celebrated its acclaimed IPO. Coinbase’s price hit an all-time high of nearly $430 immediately after the IPO. But after that, it fell significantly again, which was also due to the first major correction in the crypto market in May 2021. The price of the stock fell to $208.
Then, in the second half of the year, there was another small rally. Here too, the strong correlation with the prices of Bitcoin & Co. can be seen. BTC reached another all-time high of around $69,000 in November. At that time, COIN stock was able to pick up speed and climb to nearly $370.
COIN action with a bigger drop than the Bitcoin price
With the subsequent crash of Bitcoin, Ethereum and the entire crypto market, which also shaped the whole of 2022, COIN’s share has since fallen further and further. It is currently only listed at around $33, which also marks an all-time low. Compared to the record values of the previous year, the COIN/USD exchange rate corrected by an incredible 92%. This drop exceeds even the least of cryptocurrencies considered to be highly volatile. The price of Bitcoin has lost less than 80% from its all-time high.
The return to the stock market, initially celebrated, has become a problem child. Incidents this year, such as the crash of crypto exchange FTX, have permanently damaged trust in digital assets. Of course, the token of the crypto exchange Coinbase also suffers. Even though the American company does not want to talk about payment difficulties so far, it seems clear that developments this year should also have affected Coinbase extremely.
Coinbase prepares for the worst and lays off staff
Already in July of this year and therefore well before the bankruptcy of FTX, the exchange had imposed a hiring freeze and laid off almost 20% of its employees. CEO Brian Armstrong spoke about rapidly changing economic conditions and the potential for recession. These factors contributed to the decision to cut staff. According to Armstrong, the company must prepare for the worst.
Armstrong was right with this negative forecast, as the current situation in the crypto market shows. Still, the company is trying to spread deliberate optimism in its latest 2023 market overview report. It is therefore believed that there is still an appetite for digital assets.
Coinbase raised in 2018 at a valuation of $8 billion. It is currently trading at a valuation of $9 billion. Meanwhile:
2018 revenue: $520 million
2022 revenue: $3.3 billion
2018 Users: 22m
2022 users: 101 million
2018 assets on the platform: $11 billion
2022 assets on the platform: $101 billion
— Matt Hougan (@Matt_Hougan) December 20, 2022
Bitcoin and Co. needs a catalyst for 2023
In its report, Coinbase writes that, from their perspective, the investment requirements for cryptocurrencies such as BTC and ETH have not fundamentally changed, despite the major correction. However, to decouple them from traditional risk assets, digital currencies need a “differentiated catalyst” in Q1 2023. Here, Coinbase sees potential in the DeFi sector in particular, which it believes will continue to grow. . On the other hand, centralized platforms and financial institutions are going through increasingly difficult times, as the FTX, Celsius and Three Arrows Capital incidents have shown. According to Coinbase, DeFi has better trust and transparency characteristics because blockchain technology offers these criteria. .
“Borrowing money in the crypto space has become incredibly difficult in 2022 due to all the credit being taken out of the system,” Coinbase continued. However, the continued depreciation of lenders due to the implosion of companies like Celsius and 3AC indicates further ongoing consolidation. Coinbase therefore expects significant improvements and stricter guidelines for lending in the crypto space and asset collateral in the future.
Mining barely profitable
Coinbase does not expect the market to recover quickly in 2023. “We believe that investors’ willingness to accumulate altcoins was severely impacted by the 2022 deleveraging and could take several months to fully recover.” must partially liquidate their BTC reserves to continue to exist. Added to this is the rise in electricity prices around the world due to crises and inflation, which would make mining less profitable. “As a result, we expect the Bitcoin mining industry to continue to consolidate in 2023,” Coinbase said.
If Coinbase is correct in its assessment, its own shares should not see strong bullish momentum in the near term. Nevertheless, as the price correction increases, the chances of COIN soon bottoming out increase. The extreme correction of 92% to the all-time high could therefore be a good time to think about buying Coinbase shares.
COIN stock could explode by 600%
Technical chart analysis also gives some hope here. As seen on the daily chart of COIN/USD, the price is near the end point of a large chart formation. The descending wedge that COIN/USD is moving in is a bullish pattern where an upside breakout is considered more likely. Despite two false exits, this could be a valid formation if the price breaks out on or before January 10th.
Currently, the price is still trading between falling resistance and support lines, however, an upside break could see COIN/USD a technical price target around $230. Using the current price of around $33, investors who buy COIN now can see a return of around 600% at best. This could make COIN a very attractive investment for 2023.
Alternative: Fight Out Token FGHT in advance
The takeover of FGHT could also be lucrative in 2023. Behind the token is the new Fight Out project. It focuses on the new mega-topic Metaverse and wants to bring fitness apps into the virtual space. The developers also brought in fitness experts.
A bonus of 50% of the current presale for the purchase of FGHT is particularly attractive. But that offer may soon run out. The project has already raised around $2.3 million. Once the $5 million mark is reached, this bonus ends.
Offer corresponding to your criteria…
Cryptocurrencies are a highly volatile and unregulated investment product. Your capital is in danger.