Coinbase stock price has retreated for three consecutive weeks as Bitcoin and other altcoins have suffered a harsh reversal. After peaking at $350 earlier this month, the stock has plunged by almost 25%, moving to a bear market. So, is COIN still a good buy in 2025 as the Base Blockchain surges?
Bitcoin and altcoins have dived
Coinbase share price has dropped sharply primarily because of the performance of Bitcoin and other altcoins like Ethereum and Ripple. Bitcoin peaked at a record high of $108,000 and has retreated to $95,000. Similarly, Ethereum price found substantial resistance at $4,000 and then dropped to $3,500.
Coinbase, a top crypto exchange, has a close correlation with Bitcoin and other altcoins. In most periods, its stock jumps when Bitcoin is rising for two main reasons. First, Coinbase is one of the biggest Bitcoin holders with 9,480 coins in its balance sheet.
At the current price, these coins are valued at over $882 million, down from $1.08 billion when the coin was at its all-time high earlier this month.
Second, Coinbase and other crypto exchanges see higher volumes when Bitcoin and other cryptocurrency prices are soaring. This is notable since Coinbase makes most of its money from transaction costs.
A good example of this performance is what happened in 2021 and 2022. Bitcoin and most altcoins surged in 2021, pushing Coinbase to make over $7.35 billion in revenues.
The situation changed in 2022 as the Federal Reserve hiked interest rates and companies like Celsius and Terra crashed, bringing Bitcoin to $16,000. At the time, Coinbase’s revenue crashed by over 50% to $3.1 billion. Coinbase’s revenue in the trailing twelve months was $5 billion, helped by the crypto surge.
A key issue that Coinbase is facing is that the centralized exchange industry has become highly competitive. As a result, the company has continued to lose market share to companies like OKX, Crypto.com, and Bybit. This performance is mostly because Coinbase has largely avoided listing some of the recently launched tokens.
Read more: Should you buy Coinbase stock after its post-earnings dip?
Base Blockchain could boost Coinbase stock
A major catalyst that is likely not priced in by market participants is Base Blockchain, a layer-2 network that Coinbase launched in 2023. In just one year, the network has become the sixth-biggest chain in the crypto industry, with a total value locked (TVL) of over $3.48 billion and its bridged funds to $14.7 billion.
Base Blockchain has passed other large layer-2 networks that were established many years ago like Arbitrum, Polygon, and Optimism.
Protocols on Base have continued to see higher volume than most popular networks. Its DEX networks handled volume of over 181 billion since inception and $12 billion in the last 7 days.
Therefore, there are chances that Base Blockchain will receive a multi-billion dollar valuation when it launches its token, which could happen in 2025. For example, Base is bigger than Cardano, a network valued at over $31 billion and Avalanche, which has a market cap of over $15 billion.
Base is also bigger than Hyperliquid, whose fully decentralized valuation is $28 billion and Eigen, the biggest staking company with a valuation of $6 billion. Also, Arbitrum, the second-biggest L2 network has an FDV of $7.69 billion. Therefore, a Base airdrop will likely push Coinbase stock price higher.
COIN chart by TradingView
Technically, the COIN stock price has dropped to $265 and retested the handle section of the cup and handle pattern. It has remained above the 50-week Exponential Moving Average (EMA), a positive sign.
Therefore, the shares will likely rebound in January as crypto investors move back from the holiday season.
The post Coinbase stock has a hidden catalyst in 2025: Base blockchain appeared first on Invezz