Coinbase Global (NASDAQ:COIN) stock isn’t a cryptocurrency, but it can still allow investors to ride along as Bitcoin (BTC-USD) heads higher. I am bullish on COIN stock because there could be a Bitcoin fund coming soon, and this would indirectly but powerfully benefit Coinbase.
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Headquartered in Delaware, Coinbase Global operates a popular cryptocurrency trading platform. The company generates revenue when people buy and sell Bitcoin and other popular cryptocurrency tokens on its platform.
Since Coinbase has an earnings event coming up in early November, it’s understandable if you want to hold off on buying COIN stock. On the other hand, some recent developments indicate that today is a good day to consider starting a Coinbase share position for the long term.
Why Did Coinbase Global Stock Spike Today?
Coinbase stock can be a fast mover sometimes, but today’s 6%+ rally was definitely notable. Clearly, there was something going on with Coinbase, or at least with cryptocurrency generally.
Just take a look at what’s happening with Bitcoin, and you’ll see why stock traders are focusing on Coinbase now. The Bitcoin price has jumped from $27,000 to nearly $34,000 in roughly one week.
Some investors use COIN stock as a proxy for Bitcoin, and the two assets often have a close correlation. Hence, if you’re bullish on Bitcoin and expect it to continue rallying through the end of the year, you might choose to buy some Coinbase shares.
This makes sense since Bitcoin might not easily fit into a retirement account or other restricted type of account. Furthermore, there’s currently no spot Bitcoin exchange-traded fund (ETF). Thus, both retail and institutional investors frequently use COIN stock to represent their positions in cryptocurrency and the blockchain.
Personally, I like the idea of combining some Bitcoin, and maybe a handful of other cryptocurrency coins, with some Coinbase shares. Always bear in mind that buying Coinbase stock isn’t the same thing as buying Bitcoin, and Coinbase’s upcoming earnings report could create a divergence between the two assets.
Coinbase Global Would Benefit from a Spot Bitcoin ETF
Let’s back up for a moment. You might wonder why Bitcoin is going up so much. The answer is that investors are excited about the near-term possibility of a spot Bitcoin ETF.
As you may be aware, the Securities and Exchange Commission (SEC), under its current chairman, Gary Gensler, hasn’t had a very positive relationship with Coinbase Global and with crypto-related firms generally. For instance, the Gensler-led SEC sued crypto exchange and Coinbase rival Binance (BNB-USD) and then sued Coinbase, alleging that it’s operating as an unregistered broker and exchange.
Moreover, New York Attorney General Letitia James recently filed a sweeping lawsuit against a number of cryptocurrency companies, potentially including Coinbase. So, does this mean there’s no hope for a spot Bitcoin ETF to get approved by the SEC, and will Coinbase always be the target of litigation?
There is actually hope, as Blackrock (NYSE:BLK) is working diligently to get a spot Bitcoin ETF approved for trading in the U.S. If any firm has a real shot at getting this type of fund approved, it’s a financial behemoth like Blackrock.
Hopes of a spot Bitcoin ETF approval have stoked optimism for Coinbase, as the company and the blockchain community generally strive for legitimacy and broad acceptance. The point is that Blackrock might help to validate cryptocurrency in the eyes of regulators, and Coinbase would be a direct beneficiary of this.
Is COIN Stock a Buy, According to Analysts?
On TipRanks, COIN comes in as a Hold based on five Buys, six Holds, and six Sell ratings assigned by analysts in the past three months. The average Coinbase Global price target is $84.20, implying 2.5% upside potential.
If you’re wondering which analyst you should follow if you want to buy and sell COIN stock, the most profitable analyst covering the stock (on a one-year timeframe) is Patrick O’Shaughnessy of Raymond James, with an average return of 24.33% per rating and a 50% success rate. Click on the image below to learn more.
Conclusion: Should You Consider COIN Stock?
Coinbase Global stock provides indirect exposure to the ups and downs of cryptocurrency and the blockchain. Plus, the approval of a spot Bitcoin ETF could happen soon, and that would likely help Coinbase gain legitimacy and expand its user base.
Sure, it’s possible to own some Bitcoin as well as some Coinbase Global shares. That’s actually not a terrible idea. However, whether you choose to own cryptocurrency directly or not, I believe that now is a good time to consider riding the crypto tide via COIN stock.
