The crypto winter of 2023 appears to be thawing, setting the stage for a potential rebound in Coinbase Global (NASDAQ: COIN) and other publicly traded crypto companies.
Bitcoin gained over 80% in the past year and recently broke back above the psychologically important $40,000 level. Other major cryptocurrencies like Ethereum have also rebounded from their lows.
This resurgence has already boosted shares of Coinbase and its peers:
- Coinbase stock is up over 130% from January 2023 lows
- Galaxy Digital shares have more than doubled over the same timeframe
- Bakkt is up over 50% to start the year
“The crypto markets tend to move in cycles, and we seem to be entering a new bullish phase,” said Tobi Opeyemi Amure, an analyst at Trading.Biz. “As the tide rises again for bitcoin and other digital assets, exchanges like Coinbase stand to benefit tremendously.”
The sentiment shift comes on the heels of Coinbase weathering the storm and emerging from the so-called “crypto winter” in a position of relative strength:
- While many competitors shuttered operations last year, Coinbase kept trading through the downturn and austerity measures have put their finances and cost structure on firmer ground entering 2024.
- Legal risks also appear to be moderating after the company notched a partial victory in its battle with the SEC late last year.
- With fundamentals improving and a return to profitability on the horizon, the stock looks attractively valued at current levels compared to history.
Key reasons for optimism on Coinbase shares:
- Strong network effects and brand recognition in a consolidating industry
- Potential upside from new product offerings like crypto staking, debit cards, and NFT marketplace
- Fundamentals turning a corner with the path back to GAAP profitability
- Upgraded ratings and positive analyst commentary around strengthening competitive positioning
“Coinbase has always been one of the elite crypto platforms in terms of trust and reliability,” Tobi Opeyemi Amure added. “Their brand emerged largely unscathed from 2022’s tribulations, and they are poised to snap up market share from struggling or failed rivals in 2023.”
No investment is without risks, and Coinbase still faces no shortage of potential pitfalls:
- Regulatory clampdowns remain an ever-present threat in such a new and evolving industry
- Continued volatility and bear markets could dampen trading activity and interest
- Execution risks around new products and services still untested at scale
However, with the crypto spring seemingly in bloom, Coinbase looks ready to rebound along with the broader digital asset ecosystem. For opportunistic investors who can stomach the turbulence, Coinbase shares offer a unique play on this accelerating megatrend over the long term