As Crypto Prices Continue to Drop

As Crypto Prices Continue to Drop, Coinbase Competition Heats Up

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– Cryptocurrency exchange Coinbase stock has declined by close to 27% over the past month after seeing a strong recovery through the month of July
– The recent sell-off comes as crypto prices have declined once again with the Federal Reserve indicating that it would continue on its path of interest rate hikes, despite a slight slowdown in inflation
– Over Q2 2022, the trading volumes on the companys platform fell by almost 54% to $217 billion, while revenue declined by 64% year-over-year to $808 million
– While Coinbase has focused more on retail traders, who have moved to the sidelines through the crypto crash, rival offshore platforms have attracted more volumes from larger traders
– For perspective, Coinbases market share fell to 6.3% in July 2022 down from 10.7% in January, per data from CryptoCompare
– While its hard to time an entry into Coinbase stock amid the market volatility, some factors are worth considering for potential investors
– Things are likely to remain tricky for non-productive assets such as crypto, as the Fed continues its monetary tightening
– However, cryptocurrencies such as bitcoin have shown resilience in the past, bouncing back stronger after big sell-offs
– We could see this again as the crypto cycle turns (typically two to four years, according to Coinbase)
– As a company, Coinbase has shown potential for extraordinary profits during good times
– Over 2021, the companys total profits stood at $3.6 billion on revenues of about $7.4 billion
– This could make the stock worth a look during the current downturn
– Moreover, through the current crypto bear market, several smaller platforms such as Celsius and Voyager Digital have filed for bankruptcy, while suspending account withdrawals
– These developments might help more established and well-capitalized players such as Coinbase eventually win over more retail investors, as things get better
– There could be some upside for Coinbase in the near-term as well
– Ether ETH eum – the second largest cryptocurrency by market cap – is likely to see a big network overhaul in the coming weeks
– This is expected to open up additional commission-related revenue streams for the likes of Coinbase, which is one of the largest players in the Ethereum trading space
– We value Coinbase stock at $120 per share, which is significantly ahead of the current market price of $71 per share

0x0 10 As Crypto Prices Continue to Drop, Coinbase Competition Heats Up

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