Coinbase (COIN) Stock Rises 10% as Investors Turn Bullish on Earning Power

9 months ago 3

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The stock of Coinbase Global (COIN) rose 10% after JPMorgan upgraded the exchange’s stock to neutral. The bank’s expert sees potential for COIN, given its strong links to the sustained Bitcoin price momentum.

JPMorgan analyst Kenneth Worthington upgraded COIN to neutral from underweight as Bitcoin touches $52,400.

Worthington Flips Bullish Amid Bitcoin Momentum

Worthington said that the launch of Bitcoin exchange-traded funds (ETFs) has resulted in a meaningful price appreciation for the underlying Bitcoin asset instead of just being a sell-the-news event. The bullish price momentum improves the earning power of crypto companies like Coinbase. Earlier this month, crypto brokers Robinhood affirmed that customers preferred Bitcoin spot trading over ETFs, suggesting post-ETF revenue potential for spot trading.

“We are returning to a Neutral rating on Coinbase (COIN) as we see the higher cryptocurrency prices not only sustaining, but improving activity levels and Coinbase’s earnings power as we look to 1Q24,” Worthington said.

Earlier in the year, Worthington downgraded the stock to underweight. At the time, he set an $80 price target for the asset, arguing the exchange faced headwinds as investors piled into the new ETFs.

Now, Worthington and others are optimistic about Coinbase stock ahead of its Q4 2023 earnings call. In Q3 2024, the crypto exchange beat the top-line estimates with a 14.2% annual revenue increase to $674.2 million. The company’s custody business also appears set to thrive, being chosen as the custodian for Bitcoin ETFs from Franklin Templeton, Global X, Valkyrie, Invesco Galaxy, WisdomTree, Bitwise, BlackRock, and Grayscale.

COIN’s correlation with Bitcoin’s price is also a cause for investor optimism. The stock price surged 62% in November 2023 before the US Securities and Exchange Commission approved Bitcoin ETFs.

COIN Price Poised for Breakout

Yesterday, the COIN price reached the 0.618 Fib retracement resistance level of the previous decrease at $160. This is also a horizontal resistance area. This level often acts as the top if the movement is corrective.

However, the premarket price of COIN is currently at $168, considerably above the 0.618 Fib retracement resistance level.

The closest resistance is at $187, created by the 2023 highs. If COIN were to break out above it, there would be a lack of resistance until $232, 45% above the current price.

The RSI supports the breakout since it has moved above 50 (green icon). Conversely, failing to increase above $160 can trigger a 25% drop to the closest support at $120.

BeInCrypto contacted Coinbase for comments but did not hear back at the time of publication.