Cryptocurrency prices have done modestly well in the past few weeks. Bitcoin has remained stubbornly above $40,000 while Ethereum is above $3,000. This recovery has helped Coinbase (COIN) stock price in its recovery. It has moved from the monthly low of $149.86 to $183. Other firms in the industry like Bakkt and MicroStrategy have also seen their stock prices rebound.
Coinbase stock has suffered in the past few months because of the ongoing cryptocurrency winter. In this period, the prices of most coins have dropped, with the industry’s total value dropping from over $3 trillion to below $2 trillion. As a result, many analysts have been forced to downgrade the company’s outlook. For example, on Tuesday, experts at Citigroup downgraded Coinbase’s share price target from $300 to $275.
A quick look at MarketBeat shows that most analysts covering the stock have lowered their price target. This includes analysts from companies like Goldman Sachs, Compass Point, Canaccord Genuity, and Oppenheimer, among others. As a result, the average estimate of Coinbase share price is at $334, lower than the previous $334.
COIN faces multiple fundamental and technical problems. For example, there are concerns about whether cryptocurrency prices will move back to their all-time highs. For example, Bitcoin has remained below its all-time high for months. As a result, this could push more people out of the cryptocurrency industry.
The company knows this, as the CFO said in the past Q4 earnings: “In terms of subscription and services revenues, we do anticipate the price effects i.e., lower crypto prices we’ll drive lower revenue in Q1 as compared to Q4, but we’re excited about the prospect of this revenue stream nonetheless.”
On the other hand, Coinbase has multiple opportunities going forward. One of them is its subscription business, which brought in over $500 million of revenue in 2021. That was a 10x increase from 2020. The company believes that this revenue will be pivotal in its growth. In addition to lower volume, competition from centralized and decentralized exchanges is another source of concern.
Coinbase stock price prediction
Coinbase shares have been in a consolidation phase in the past few weeks. It remains about 50% below its all-time high. The stock has formed a descending channel pattern highlighted in blue. This pattern has a close resemblance to a falling wedge. The current price is slightly below the upper side of this channel.
Therefore, the short-term Coinbase stock price forecast is neutral. But I expect it to resume the downward trend and rest the lower side of this channel at about $150. The alternative scenario is where the stock moves above the channel. It will signal more buyers in the market and push the shares to about $215. This COIN forecast is in line with what my colleague wrote a while ago.