CoinBase As A Crypto Play

11/15/24 04:08:33 PM

by Stella Osoba, CMT

With the recent surge in Bitcoin prices, there are other stocks out there that may ride the rise in crypto, one such is Coinbase Global, Inc. (COIN).

Security: Coin
Position: N/A

COIN is a news site specializing in cryptocurrency related news. It was founded in 2013 and made its debut on the Nasdaq on April 14, 2021. Figure 1 is a weekly chart showing COIN's entire price history as a publicly traded company. As a cryptocurrency play we can see that the stock is volatile, it has swung from a high of $368.90 to a low of $31.55. The stock has recently tried and failed to claim it prior high in a V-shaped reversal, but succeeded in rising only to $283.48 before giving up some of these gains.

Figure 1. Weekly chart for COIN.

Graphic provided by: StockCharts.com.

Figure 2 is a daily chart showing just over one year of price history. We can see price trying to reclaim the prior highs reached in 2022. But price succeeded in reaching only $283.48 before retreating. As price oscillates above and below its 50-day moving average (MA), it makes a series of lower highs and lower lows. The 50-day moving average which lags price eventually shows this downward slide by slicing through the 200-day MA, forming a bearish death cross.

Figure 2. Daily chart for COIN.

Graphic provided by: StockCharts.com.

In Figure 1, we can see that price has broken its uptrend line. The trend line is depicted by the green line on the chart. Figure 2 shows the price action in more detail. Price action is choppy but seems to halt in September 2024, when the stock trades for a low of $146.12. But the earlier steep price declines has the lagging moving averages forming the death cross despite temporary price rises. Volume rises as price rises which is temporary bullish.

Figure 3. Daily chart comparison with COIN and $BTCUSD.

Graphic provided by: StockCharts.com.

Figure 3 is a line chart of COIN superimposed over a line chart of Bitcoin ($BTCUSD) which is the most popular and valuable cryptocurrency. We can see at a glance that the price history of COIN tracks closely that of BTC. Major price moves such as falls in the price of BTC are mirrored by falls in the price of COIN, rises in the price of BTC are also mirrored in rises in the price of COIN. This is true until about April 2024.

The prices of the two securities have recently detached from each other. BTC has recently made new highs while COIN has not. In fact, from late July 2024, the price of BTC has surged while that of COIN has fallen see green circle on Figure Three. While BTC is not the only cryptocurrency available, it is the largest and most valuable and therefore can be seen as a bell weather of the crypto industry in general.

Stella Osoba, CMT

Stella Osoba is a trader and financial writer. She is a frequent contributor to "Technical Analysis of Stocks and Commodities" magazine and "Traders.com Advantage" as well as other financial publications.


E-mail address:	stellaosoba@gmail.com

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CoinBase As A Crypto Play

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