Coinbase (COIN) stock price rose slightly this week as American shares rebounded and as Bitcoin’s death cross pattern remained elusive. It jumped to a high of $164.42 on Friday, up by over 12.7% from its lowest point this month. It remains 41% below the highest point this year.
Major headwinds
Coinbase is facing major headwinds as cryptocurrency prices retreat and as competition in the centralized and decentralized exchange industry rose.
Bitcoin, the biggest coin in the industry, has remained below $60,000 in the past few weeks while Ether has come under heavy selling.
Centralized exchanges like Coinbase thrive when cryptocurrencies are doing well because it usually leads to more volume.
Data by The Block shows that volume in centralized exchanges peaked in March this year as most coins were soaring. It has been relatively stagnant in the past few months as most coins have pulled back.
Coinbase has also lost market share against several crypto exchanges. Data shows that the exchange handled volume of over $66 billion last month.
Binance, the biggest exchange, handled $448 billion in the same month while Bybit, Crypto.com, Huobi, and OKX handled $154 billion, $68 billion, and $66 billion, respectively. This means that Coinbase has slipped in popularity since it was once the second-biggest exchange in the world after Binance.
Meanwhile, Coinbase’s earnings from Bitcoin and Ethereum ETFs will likely be under pressure since these funds have seen substantial outflows in the past few weeks. Ethereum ETFs have had cumulative net outflows of over $582 million while Bitcoin funds have lost substantial sums in the pasr few weeks.
Coinbase has emerged as the biggest players in the crypto ETF industry, where it offers custody solutions to companies like Blackrock, Ark Invest, and Bitwise.
Base Blockchain is thriving
Still, on the positive side, there are signs that Base Blockchain, which Coinbase launched last week, is doing well.
Base is a layer-2 network that allows developers to build applications across industries like decentralized finance, non-fungible tokens (NFT), and gaming.
As a layer-2 network, Base helps to supercharge Ethereum’s network by increasing transaction speeds and lower costs. Unlike Ethereum, it can handle thousands of transactions per second at minimal costs.
There are signs that Base is doing well as more people opt for layer 2 networks because of their features.
Data by DeFi Llama, shows that Base has attracted 348 developers in the decentralized finance industry. These dApps have over $1.5 billion in total value locked, making it the sixth biggest network in the industry after Ethereum, Tron, Solana, BNB, and Arbitrum.
It is the second-biggest layer-2 network in the industry after Arbitrum, making it bigger than Polygon, the pioneer in the industry. Also, its network has over 1.5 million active addresses.
Additional data shows that Base has become a big player in the stablecoin industry, where it has over $3.4 billion in them. Most of the stablecoins in the ecosystem are USD Coin (USDC), which account for a 95% share.
Most importantly, Base has become the third-biggest chain for decentralized exchanges. Its DEX platforms handled volume of over $3.1 billion in the last seven days.
This growth means that Base Blockchain has started to make money. Data by TokenTerminal shows that the chain has made over $57 million in fees this year, a small amount considering that Ethereum and Tron have made over $1 billion.
However, Base could become a key part of the Coinbase ecosystem, especially if the company decides to launch its token. Arbitrum has a market cap of over $1.8 billion while Polygon is valued at over $1.3 billio. Optimism is valued at over $1.8 billion.
Therefore, a Base Blockchain token could fetch a valuation of over $2 billion or even higher if cryptocurrencies recover.
Coinbase stock price analysis
The daily chart shows that the Coinbase share price formed a triple-top chart pattern and crashed below its neckline at $195.05 recently. In most cases, this is one of the most bearish patterns in the market.
Coinbase is also hovering at the 50% Fibonacci Retracement point. Most importantly, there are signs that it is about to form a death cross pattern as the spread between the 200-day and 50-day moving averages are about to cross each other.
If this happens, there are signs that the stock will have a bearish breakout as sellers target the key support level at $100.
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