Coinbase stock price joined the rest of Wall Street in a deep sell-off on Wednesday. It dropped by almost 5%, its biggest single-day drop since July 18th, bringing its market cap to over $60 billion. Other crypto-related stocks like Marathon Digital, Riot Platforms, and Argo Blockchain slumped.
CEX and DEX volumes have slumped
Coinbase’s sell-off happened even as the company started to receive Ethereum inflows in its institutional custodial business. These ETFs have attracted millions in assets, and analysts expect inflows to rise to over $8 billion this year.
Coinbase is benefiting from these ETFs since it is the main custodian for seven of the nine new funds and the biggest custodian for most spot Bitcoin ETFs. This business will allow it to earn stable fees in the long term.
Coinbase is also benefiting from its Base Blockchain, which has continued climbing the ranking ladder. Data shows that it is now the sixth-biggest blockchain in the world, with over $1.72 billion in assets and 320 DeFi dApps. As a private blockchain, all Base fees go to Coinbase.
However, the company is facing substantial risks. First, Bitcoin price has found strong resistance at $68,500, triggering a big sell-off among altcoins. Coinbase does well when Bitcoin and other altcoins are rising.
Second, there are signs that trading volume has dropped in the centralized and decentralized exchange (DEX) industry. DEX volume jumped to $266 billion in March as Bitcoin price soared to a record high. It has now retreated to $149 billion. The same trend has happened in CEX exchanges, meaning Coinbase will likely report weak earnings next week.
Analysts expect the results to show that revenue dropped to $1.37 billion in the second quarter from $1.64 billion in Q1. Profit is expected to drop to 82 cents per share from the previous $4.40.
Coinbase stock price analysis
Meanwhile, the Coinbase share price has formed one of the most dreaded candlestick patterns in the market: a shooting star. A shooting star pattern is characterized by a small body and a long upper spike, and it happens during an uptrend.
The upper side of the wick was at $272.10, its highest point since March 27th. COIN dropped below the important support level at $263, its highest level on June 7th.
Therefore, the stock will likely continue falling as sellers target the 50-day moving average at $233. A drop below that point will see it drop to retest the ascending trendline that connects the lowest swing since May 14th.
