The COIN stock price has stabilized in the past few days, mirroring the performance of the broader crypto market. Coinbase was trading at $182 on Wednesday, higher than the year-to-date low of $146. Still, this rebound could be short-lived as the stock has formed two risky chart patterns on the daily chart.
COIN Price Prediction: Technical Analysis
The daily timeframe chart reveals that the COIN stock price peaked at $447 and then started a slow downward trend. It eventually bottomed at $142, which coincided with the lowest level in April last year.
A closer look shows that the stock is in the process of forming an inverted cup-and-handle pattern, with $142 being its lower side. The ongoing rebound is part of the handle section of this pattern. Additionally, the stock has formed a bearish flag pattern, shown in black.
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The ongoing recovery has started to stall, with the Average Directional Index (ADX) falling from 45 on February 12 to the current 30.
Therefore, technical analysis suggests that the stock will soon have a strong bearish breakdown, with the initial target being at $142. A drop below that price will point to more downside, potentially to the psychological level at $100.
Coinbase is Facing Major Risks Ahead
COIN is facing substantial risks that will impact its performance in the near term. One of them is that the crypto market weakness continues in the current quarter, with Bitcoin trading at $68,000. Data shows that volume across exchanges has continued falling.
According to CoinMarketCap, the 24-hour volume dropped by 10% to $113 billion. Falling volume is important for Coinbase as it makes most of its money by processing transactions.
Another risk is that the USDC supply has dropped in the past few weeks, moving from nearly $80 billion to $75 billion today. Coinbase makes millions of dollars by investing its USDC holdings into short-term government bonds.
The company’s efforts to diversify its business by launching products like predictions and stock market trading might not work out well. For one, these solutions are being offered by most companies, including popular names like Robinhood and WeBull. Also, they might not generate as much revenue as analysts and the company expects over time.
Coinbase stock price is also at risk as investors anticipate more revenue weakness. The average estimate among analysts is that its revenue will be $1.57 billion, down by 21% from the same quarter last year. Its annual revenue growth is expected to be $7.25 billion, up by just 1% from last year.
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