Crypto Rally Powers Coinbase Stock Higher

Among crypto-correlated stocks, it is difficult to find a more famous and more correlated name than the exchange operator Coinbase (NASDAQ: COIN).

For better or worse, many investors assume that Coinbase’s business model is heavily dependent on cryptocurrency prices rising, suggesting that the exchange operator’s stock is vulnerable as bitcoin and its brethren pull back. This scenario is playing out – in a positive way – this year as a significant rally in crypto prices is driving massive gains in Coinbase stock.

Shares of the California-based company rose 11.78% on above-average volume Tuesday, extending the stock’s one-month gain to nearly 29%. Since the start of 2023, shares have risen a staggering 137.33%. Now analysts are starting to get positive about the name.

On Tuesday, US Tiger Securities analyst Bo Pei upgraded Coinbase to “buy” from “hold” while raising his price target on the stock to $200 from $65. Not only is that the highest outlook among the 20 sell-side analysts covering the stock, but it also suggests shares could more than double from the March 21 close to $83.99. It’s been about a year since Coinbase traded at $200, and its 52-week high is $206.79.

“Crypto has started another bull run and so has Coinbase,” Pei said in a Monday note. “We believe crypto price is the main factor to consider when investing in Coinbase. We believe a crypto bull market will drive significant revenue growth.”

Amid a burgeoning crypto boom, Coinbase could get a boost as more former customers increase trading activity on the platform and as new crypto bulls join the party.

“Our thesis assumes that a new crypto bull market has begun and Coinbase’s revenue and profits can recover to the 2021 level when Coinbase traded above $200,” Pei noted.

Perhaps what makes Coinbase even more appealing is that despite bitcoin being on fire to start 2023, the largest digital currency by market capitalization still needs to more than double to regain its November 2021 highs of around $69,000. If it scenario comes close to playing out, Coinbase stock’s crypto correlations could work to the benefit of investors.

“And digital assets is on an impressive winning streak. While Bitcoin remains well below its late-2021 high near $69,000, the biggest crypto has rallied around 70% so far this year from the depths of a bear market. The price has reached its highest point since June, when the crypto crash accelerated by a series of bankruptcies” Jack Denton reported for Barron’s.

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The opinions and forecasts expressed herein are solely those of Tom Lydon and may not materialize. Information on this website should not be used or construed as an offer to sell, a solicitation of an offer to buy or a recommendation for any product.