Coinbase stock price soared. Is it time to buy?

You’d be hard-pressed to find a stock that performs better than that these days. coinbase (coin 4.79%). Shares of the digital asset brokerage and exchange have surged 626% since the start of 2023. bitcoin And the stock market.

Coinbase’s momentum continues into 2024, with the stock up nearly 50% this year (as of April 8). this top cryptocurrency stocks It just exploded. Is now the time to buy stocks?

favorable trend

Coinbase’s impressive stock price rise has been driven by a very strong trend that is clearly working in Coinbase’s favor. Investors need to know about them.

The first driver should be a rebound in the overall cryptocurrency market. As of early 2023, the industry’s market capitalization reached approximately $800 billion. As of this writing, it is worth $2.7 trillion. After investors left the industry in 2022, things bounced back in dramatic fashion.

I believe it will be approved this year. Bitcoin exchange traded fund (ETF) spot It is also increasing optimism about the cryptocurrency industry. And considering Coinbase is the custodian service provider for many of these investment products, this is a vote of confidence for shareholders.

I think another positive trend working on behalf of Coinbase is how much the business has shifted to a more sustainable model. In 2021, when the cryptocurrency market last surged, 93% of the company’s net revenue came from trading fees earned by facilitating transactions on behalf of individuals and institutions. In 2023, another very positive year for the market, 52% of sales came from transactions.

Changes result from subscriptions and service expansions. Management hopes this is just the beginning of a more predictable and stable business model.

One of the reasons to buy stocks

It’s hard to overstate how fantastic Coinbase’s profits have been. But if you missed a large gathering, it’s best not to be afraid of missing out (FOMO). Instead, think about where your business and stock will be three, five, or even 10 years from now. It’s important to have this type of long-term mindset when investing in stocks.

In that sense, I believe Coinbase is a smart buy only for investors who are bullish on cryptocurrencies in general. This is because this business can be seen as a bet for the growth of the entire industry.

Coinbase is pushing for cryptocurrency regulation, consulting with lawmakers on how to design appropriate rules. The company has hundreds of millions of dollars in venture-style investments in private crypto-related companies, giving it direct exposure to their success. It is one of the largest and oldest brokerage firms and exchanges in the world. And it is attempting to usher in a new era in the industry focused on pursuing greater utility for cryptocurrencies. Therefore, it is reasonable to expect Coinbase’s financials and stock price to do well if digital asset prices also rise over time.

Coinbase stock is currently down 28% from its all-time high, so bullish investors have the opportunity to buy on significant dips. I personally am not a stock buyer. Because we don’t know where the cryptocurrency industry will be 10 years from now. There is too much uncertainty for my liking.

But for growth-oriented investors who have the tolerance to add a little more risk to their portfolios and who believe in the future of digital assets and blockchain technology, Coinbase could be a great buy right now. Maintain a very long-term mindset about how things will progress. And be prepared for the inevitable volatility along the way.