Coinbase’s Uphill Battle: Where Is COIN Headed?

Experts are pessimistic about Coinbase stock as the exchange battles with regulations and competitive challenges.

Along with the crypto market rally, Coinbase’s stock, COIN, is also up by more than 80% in 2023. While the stock trades at $57, as of writing, it has a long journey ahead to recover from the damage inflicted by the bear market.

COIN reached an all-time high of $429 in April 2021 and has since experienced a significant decline of over 85%.

Clearly, COIN is facing resistance at the $85 price range on the weekly time frame. It needs to weekly close above $85, with strong volume, to continue its 2023 uptrend. Also, the stock needs to hold its support at around $50. Otherwise, it might indicate the reversal of the 2023 uptrend.

COIN chart. Source: TradingView

Will Relocation Offshore Hurt Coinbase?

The lack of clear regulations in the U.S. has frustrated Coinbase Chief Executive Officer (CEO) Brian Armstrong. At Fintech Week in London, he said, “Anything is on the table, including relocating or whatever is necessary.”

As a matter of fact, the exchange has managed to get a license to operate in Bermuda. But, according to the WSJ, some analysts are skeptical about the exchange moving offshore.

Dan Dolev, senior analyst at Mizuho Securities, told the WSJ:

“This isn’t going to help them if the U.S. market isn’t going to be what it was like in 2021. There are a lot of international players out there. Coinbase only has an edge in the U.S. because they are so dominant.”

About 84% of Coinbase’s total revenue came from the U.S. markets in 2022.

Doing Battle With the SEC

Coinbase was served with a Wells Notice by the Securities and Exchange Commission (SEC) threatening enforcement action in late March. In retaliation, the exchange hit back by suing the SEC.

It hopes to force the federal regulator to clarify positions on cryptocurrency and whether current securities rule-making and processes can be applied to the crypto industry.

Due to the legal turmoil involving Coinbase, experts are pessimistic about COIN stock. Jason Kupferberg, a research analyst at Bank of America, says:

“The Wells Notice is the latest data point that illustrates there are some fairly significant regulatory headwinds and uncertainties that are likely to remain an overhang for the company and for the stock”

The Motley Fool explains that COIN stock represents the broader crypto market. “Investors who are bullish on the future of crypto can buy Coinbase as a bet on the growth of the entire industry. And in doing so, they wouldn’t have to choose individual tokens for their portfolios,” it says

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For BeInCrypto’s latest Bitcoin (BTC) analysis, click here.

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