Coinbase: Massive Upside During The 2023 Crypto Bull Run (NASDAQ:COIN) – Seeking Alpha
Coinbase (NASDAQ:NASDAQ:COIN) is my favorite crypto stock to own because I use Coinbase to purchase Bitcoin every paycheck and understand how significant the company is to the entire crypto ecosystem in America.
However, 2022 has been a rough year for cryptocurrencies and a lot of negative press caused many crypto newbies to lose their money and panic sell.
Several crypto brokers and trading platforms such as Voyager (OTCPK:VYGVQ) filed for bankruptcy, causing many investors to label crypto as a “scam”.
I made the mistake of placing a buy recommendation on Voyager earlier this year not knowing that the company was in trouble.
I also held Cardano (ADA-USD) on the Voyager platform and lost all of ADA as a result.
The truth is these high-profile failures benefit Coinbase in the long run as crypto holders will seek out a trusted brand name instead of attractive high yields moving forward.
The good news is BlackRock selected Coinbase to provide crypto trading services for its clients. This is a big win for Coinbase and the entire crypto industry because BlackRock (BLK) is the largest asset management firm in the world with over $10 trillion AUM.
In this article, I will provide my updated Coinbase stock analysis and share why I believe 2023 will be an important year for the company.
I published my previous Coinbase article back in May 2022 when crypto markets were crashing and told my followers to buy the dip. COIN stock traded at nearly $48, so you made a nice 68% gain since then if you bought the fear.
May 2022 Coinbase Article (Seeking Alpha)
We’ve seen the bottom of the crypto markets and I don’t believe things will get any worse than they did over the summer.
Anything could happen but I don’t expect COIN stock to return below $50 again unless the company performs a stock split.
Coinbase struggled during Q2 as did the entire crypto market with underperforming numbers across the board.
Coinbase Q2 2022 Results (Coinbase)
Q2 2022 revenue was $808 million (Down 64% YoY) and the company reported a $1.1 billion loss (-$4.98 per share).
In general, Coinbase will perform well during crypto bull markets and lose money during crypto bear markets. The company generates the bulk of its revenue from trading fees and needs lots of buying activity to make money.
There is no reason to panic right now and dump Coinbase stock without any thought. Crypto markets move in 4-year cycles and this is completely normal.
COIN stock trades at a much better Price to Sales ratio of 3 and its Price to Book ratio is around 3 too.
Coinbase has $6.15 billion in cash on its balance sheet and took several measures to cut costs and save money such as firing 18% of its employees and shutting down its affiliate program.
Long-term debt sits at $3.62 billion, giving the company plenty of wiggle room in case the crypto winter lasts much longer.
As of June 2022, Coinbase has $427.8 million in crypto assets. Coinbase owns 8,633 Bitcoin and 123,021 Ethereum. Check out these Coinbase statistics for more insights on the company’s most recent quarter.
While I wait for the crypto markets to recover, I’m extremely curious about Coinbase’s monthly subscription program called Coinbase One.
Coinbase One (Coinbase)
Coinbase One gives subscribers several perks including:
Coinbase One charges a $29.99 monthly fee as the company tries to diversify its revenue source away from just 1-time trading fees.
Competitors such as Robinhood (HOOD) offer $0 crypto trades and offer a crypto wallet for absolutely no cost. It makes sense that Coinbase needs to offer something special to give its users a reason to keep spending money on trades.
Peloton (PTON) CEO Barry McCarthy believes the subscription model business will save Peloton and we could see more companies like Coinbase rely on subscription revenue in the future.
Coinbase One is a must-have for crypto investors holding large sums of money on the platform. You get up to $1 million in account protection in case something goes wrong.
For just $29.99, I think Coinbase One will become extremely popular and drive a brand-new revenue stream that will help the company maintain strong cash flow during crypto bear markets.
Crypto rewards patience and I’ve been waiting silently for my crypto stocks to bounce back.
The good news is that all signs point towards a 2023 crypto bull run that could send Bitcoin and other cryptocurrencies soaring to the moon again.
Crypto analyst Miles Deutscher posted an interesting tweet that tracks the price of Bitcoin since 2011.
According to his tweet, Bitcoin follows a simple 3-year bull run followed by a 1-year bear market. This correlates to the 4-year Bitcoin halving cycle where the number of mineable Bitcoin gets cut in half every 4 years.
The next Bitcoin halving will occur around April 2024 and I believe many crypto bulls will buy Bitcoin and other cryptos in anticipation of the halving event.
Bitcoin 2024 Halving Countdown (CoinWarz)
That’s extremely bullish because Coinbase makes a lot of money during crypto bull runs.
If you bought COIN stock during last year’s IPO, then you are down 75% since April 2022.
2023 could be the year that COIN stock regains much of its losses because Bitcoin’s price and Coinbase stock are positively correlated.
Coinbase has a wide moat with its 103 million verified users but there are so many things that could go wrong.
Coinbase isn’t perfect but I trust them more than any other crypto exchange in America. The company never offered high crypto interest yields so it avoided the whole Voyager/Celsius 3 Arrows Capital bankruptcy mess.
Coinbase turned 10 years old this year and remains a super easy and safe way to buy and sell cryptocurrencies.
If you don’t want to bother owning cryptocurrency, then I believe owning Coinbase stock is the next best option.
This article was written by
Disclosure: I/we have a beneficial long position in the shares of COIN either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.