- Bitcoin and Coinbase shares have started the year well as risk assets rise.
- Bitcoin, as an independent entity, has more advantages than Coinbase.
- Coinbase stock price has done much better having risen by 160%.
Bitcoin and Coinbase stock price have had a strong comeback in 2023. Coinbase shares have jumped by over 160% from its lowest point in December while Bitcoin price has soared by 50% in the same period. In this Bitcoin vs Coinbase analysis, I will explain why BTC is still a better investment.
Bitcoin and Coinbase correlation
Coinbase and Bitcoin have a close correlation. In most cases, Coinbase shares closely track the performance of Bitcoin, which explains why the stock has done well this year. The reason for this trend is obvious since Bitcoin rally leads to a rebound of other cryptocurrencies like Ethereum, Avalanche, Velas, and GMX.
At the same time, a sharp rebound in cryptocurrencies usually leads to more inflows into exchanges like Coinbase and Binance. These inflows translate to higher fees. Data compiled by DeFi Llama shows that Binance has seen its inflows jump by over $3.5 billion in the past 30 days. It now holds over $75 billion worth of assets.
Read our honest review of Coinbase.
BTC vs COIN: better investment?
A case for investing in Coinbase can be made. For one, it is the only publicly traded company in the United States. As such, unlike Binance, it is audited by Deloitte, a big-four accounting firm. Also, as a publicly traded company, it is regulated by the Securities and Exchange Commission (SEC). As such, many people believe that it is a safe exchange.
Find out how to buy Bitcoin in 2023.
However, in terms of investment, I believe that Bitcoin is a better asset to buy than Coinbase. I say this with the understanding that Coinbase stock price will often do well if Bitcoin rises. As I have noted above, BTC and COIN have a close correlation.
First, Bitcoin, unlike Coinbase, cannot make a loss. Coinbase made a loss of over $500 million in 2022, forcing the company to lay-off 20% of its workers, as we wrote here. Bitcoin, as an autonomous project, cannot do that.
Second, BTC does not have insiders who could manipulate the price. Coinbase, as a publicly traded company, has insiders who have their own ambitions. For example, Brian Armstrong, the company’s CEO has sold stock worth over $6.8 million this year alone.
Further, Bitcoin is a more global asset whose performance is not influenced by the quarterly performance. Coinbase performance is determined by the quality of its financial results, which are published at the end of every quarter.
Most importantly, Bitcoin is its own asset class that serves a specific role in the industry. It has a limited supply and has a long history of outperformance. Despite its crash in 2022, Bitcoin was still sharply higher than where it was a decade earlier.
