Coinbase or Bitcoin: Which is a Better Buy?

Over the weekend, big investors and potentially bigger institutional players exited Bitcoin (BTC). The selling caused the most trusted and followed crypto lower. By Monday evening, BTC fell by 17.3% to around $21,800. The rapid drop is unlike anything that long-time cryptocurrency investors saw. The prior drop on weekend also foretold what would happen this week for Bitcoin.

Naturally, platform giant Coinbase (COIN) lost 11.4% on June 13. The severe volatility will discourage users from exchanging Bitcoin and other cryptocurrencies. After Coinbase rescinded job offers, froze hiring, but allocated billions for stock-based compensation, is COIN stock a buy? Alternatively, should investors hold BTC instead?

After competitor Voyager Digital (VYGVF) fell into the sub-$2.00 range, Coinbase could continue its descent. Markets value the stock at a 4.99 times P/E. Still, the market cap of $12.54 billion risks shrinking if the cryptocurrency transaction volumes as a whole fall.

Some investors believe Bitcoin is worth at least $60,000 or more. Those readers should consider holding the cryptocurrency directly instead. Investors may invest in BTC through the ETF, Bitcoin Trust (GBTC).

Stock investors who expect an eventual rebound in cryptocurrency transaction volumes may consider Coinbase at current levels. The company has high spending levels and stock-based compensation. But Coinbase is the biggest crypto platform with a strong brand name.