Crypto Plunge sends Coinbase (NASDAQ:COIN) down with it

It’s been a bad day for Coinbase (NASDAQ:COIN), the leader in cryptocurrency exchanges, as the stock is down in today’s session. The general decline in cryptocurrencies sent Coinbase lower, as the values ​​of the leading coins fell to lows not seen in recent months. Given the general state of affairs in recent months, that’s a pretty significant drop. A number of other developments, such as a particularly large bitcoin investor moving coin from Coinbase, also contributed to the decline.

The past 12 months for Coinbase stock have been highly volatile. Last September started with a slow recovery, challenging $370 per share. All bets were off after November’s first week ended, as Coinbase began a decline that continued into May.

The decline ended with one short plunge, from $123.56 on May 2nd to $53.72 on May 10th. A modest recovery followed, and Coinbase remained at its current level of around $70.

While the hit to Coinbase was significant, it’s also not likely to slow down anytime soon. While there are some points that give Coinbase a little extra hope for success in this market, there are others that will weigh on Coinbase’s chances.

I was bullish on Coinbase back in July, but now I’m going neutral. The increasing economic downturn will probably weigh heavily on the demand for cryptocurrency. It will affect Coinbase’s future going forward. There is a path to victory for Coinbase, but it’s going to take some very precisely-threaded needles to win here.

Investor sentiment shows positive signs for the COIN share

Even when things start to look bad for cryptocurrency, and cryptocurrency exchanges, clear signs of hope are emerging. Coinbase currently has a Smart Score of 7 out of 10 on TipRanks. That puts it at the highest level of “neutral”. It also suggests a better-than-even chance of eventually outperforming the broader market. There are also unexpected signs of new life coming out of insider trading numbers. Insider trading at Coinbase has actually become buy-focused after mixed numbers over the past year.

Although there was little in the way of informative transactions, the aggregate provides its own assessment. During the last three months, there were 14 buy transactions staged and only three sell transactions.

The most recent informative trade dates back to four months ago when director Frederick Ernest Ehrsam III bought over $1.8 million worth of Coinbase shares. In the meantime, the total points to 39 purchase transactions and 45 sales transactions. However, the bulk of these sales took place in the final days of 2021.

There is good news and bad news for Coinbase Stock

Coinbase is not entirely without good news. Quite a lot is happening that can give the company some hope going forward. Furthermore, it can make people buy digital currencies which can work well as an investment going forward.

For example, Coinbase has attracted some exciting buyers of its shares outside the insider chain. Three days ago, reports surfaced that Shopify (NASDAQ:SHOP) CEO Tobi Lutke picked up $1.5 million worth of new Coinbase shares. It’s worth noting, however, that these purchases stem from a Rule 10b5-1 trading plan set up in May that automates certain trades.

Coinbase is also working to improve its presence and take advantage of the upcoming US midterm elections. Coinbase rolled out a new politician identification tool that illustrates exactly which politicians have cryptocurrency right now. That will give voters a little extra insight into who to vote for, and they’ll have Coinbase to thank.

Word from JPMorgan suggests that higher interest rates could bring Coinbase an additional $1.2 billion in revenue. That’s thanks to Coinbase’s own holdings of USDC or US Dollar Coin; a stablecoin linked directly to the dollar.

However, there are some problems ahead. Not the least of these is Coinbase, which is putting money behind a lawsuit directed at the US Treasury Department regarding Tornado Cash.

Furthermore, the Securities and Exchange Commission (SEC) is also actively working towards more cryptocurrency regulation that will place a greater burden on Coinbase and increase operating costs to ensure compliance.

Then there is the elephant in the room. The ongoing massive inflation affecting many people right now is not likely to subside until the midterm elections.

With gas prices and food prices still high in many places, the idea that many will use their spare cash for crypto investments seems like a bridge too far.

Even the news of a major holder pulling bitcoin from Coinbase is a mixed blessing. Removing bitcoin from Coinbase could improve the outlook. It makes bitcoin less liquid by taking it out of circulation.

However, it could also be interpreted as a vote of no confidence in Coinbase’s ability to securely store cryptocurrency. Not everyone will, of course, but anyone who does can choose to leave.

What is the price estimate for the COIN share?

As for Wall Street, Coinbase has a moderate buy consensus rating. It is based on eight buys, eight holds and two sells assigned in the last three months. The average Coinbase price target of $103.44 implies 43.6% upside potential. Analysts’ price targets range from a low of $42 per share to a high of $220 per share.

Conclusion: The COIN stock has a difficult path to victory

We are left with a strange overall picture. While there are clear potential signs of good news for Coinbase – and by extension its investors – there are also clear problems ahead. Thus, overall, I am neutral on Coinbase. If the positives work out as well as investors hope, and the negatives can be sufficiently suppressed, Coinbase could well break out to the upside. However, that approach requires a lot to get right. These days, betting on everything working out as planned is one of the longest shots there is.

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