Crypto Volatility Will Work as a Catalyst for Coinbase
InvestorPlace - Stock Market News, Stock Advice & Trading Tips Whether you invest in cryptocurrency or not, investing in COIN stock will generate solid returns in the long run. The...
Cryptocurrency is an intimidating asset class and not one that is easy to understand. However, it is gaining popularity across the globe and people are keen on adding crypto to their portfolios. Since there are several tokens to choose from, there are ample ways to make money.
Coinbase Global (NASDAQ:COIN) garners attention whenever there is a movement in Bitcoin (CCC:BTC-USD) or Ethereum (CCC:ETH-USD). It is important to keep in mind that Coinbase is separate from Bitcoin or any other crypto asset and is nowhere directly associated with them. It facilitates the purchase and sale of crypto assets.
The company has solid growth potential in the coming months. COIN stock is down 27% in the past month. Despite this, I believe in the growth potential of Coinbase and its strong expansion strategies that will generate results. With that in mind, let’s dig deeper into the investment case of COIN stock.
More Gains it Store for COIN Stock Due to Crypto Volatility
Investors need to keep in mind that the results of Coinbase will remain volatile due to the volatility in cryptocurrency. Coinbase is not a company that offers a single product or has recurring subscription revenues. Rather, it relies on transaction fees. Whenever investors purchase or sell cryptocurrency, Coinbase makes money. With an increase in widespread adoption, the company will see higher trading and more fees.
Coinbase did not take a lot of time to reach where it is today and the popularity of cryptocurrency is only going to rise, making it the top choice of investors. The company reported revenue growth of over 300% year-over-year. It is highly profitable and could become larger in the coming year. Coinbase is growing fast and growing big. It gains popularity with the rise and fall in Bitcoin and despite not being directly affected by the highs and lows, COIN stock will continue to show volatility in the coming months due to crypto volatility.
Non Fungible Tokens (NFTs) Are Growing
Cryptocurrencies and NFTs seem like the two most used words in the financial industry in 2021 and they will continue to remain constant in the next year. NFTs have opened new investment opportunities. It is a unique crypto asset and it helps authenticate the ownership of digital assets like recordings, artwork, virtual pets, and virtual real estate. According to Business Insider, the NFT market is worth more than $7 billion. The sales have gone from $400 million a month to $2 billion a month in just one year. There is no stopping the growth of NFTs in 2022.
The NFT market is growing at a massive rate that has not gone unnoticed. Coinbase is building an NFT marketplace and it has enough cash to invest in it. The company has a high capital efficiency which allows it to invest in products like NFTs. It already has a waiting list open and the company could offer NFTs as soon as the beginning of next year. NFT offering could be transformational for the company because not a lot of people are aware them and many do not know how to go about investing in them.
The Bottom Line on COIN Stock
COIN stock is a safe bet for those who are keen on investing in crypto but are overwhelmed with the number of tokens and assets. The stock has the potential to hit $300 in the coming months and the current dip makes it the perfect opportunity to buy.
You might see volatility in the stock whenever the Bitcoin price rises or falls but this is because the market assumes that COIN stock is directly associated with Bitcoin. And this is wrong. Any rise in trading and transactions will lead to a rise in the stock.
All in all, the growing crypto craze and NFT awareness will push the stock higher and generate solid returns for investors.
On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long-term gains. Her knowledge of words and numbers helps her write clear stock analysis.
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