The sudden drop in Coinbase (COIN) is in sympathy to the technology correction underway on the Nasdaq exchange. The platform giant is at 52-week lows. Now that the stock is on sale, investors looking for exposure to cryptocurrency platforms should consider COIN stock.
Growing volatility for cryptocurrency should benefit Coinbase. The more transactions, the more revenue Coinbase collects. On Jan. 18, Coinbase teamed up with Mastercard to support NFT transactions. Coinbase benefits from introducing its ecosystem to Mastercard’s global network. This is a practical partnership. People who buy NFT using their credit cards need not open a metamask wallet. Furthermore, customers do not need to then buy a cryptocurrency like Ethereum to complete the transaction.
Mastercard benefits because growing NFT transactions will generate activity on the Mastercard network.
Risks
Coinbase has a weak moat. Customers have many platforms to choose from. Still, Coinbase may stand out from the competition by offering the best customer service, security level, and having a strong brand name. As more customers choose Coinbase, the company will invest its earnings to advertise. It may also hire more staff to increase customer support.
Your Takeaway
Coinbase has a good chance of rebounding after it posts quarterly results. It is profitable and has high cash levels. Its earnings do not depend on bitcoin and Etherum prices. So long as crypto volatility remains elevated, COIN stock is set up to rally from here
