Can ETF Doubts Stop Coinbase (COIN) Stock From Hitting New ATH?

08.02.2024

So far the year 2024 is not in favor of Coinbase’s shareholders as the asset continues to deepen its current correction trend. From the last peak of $187, the Coinbase (COIN) Stock has fallen 37.36% to $117 within the last 30 days of trading. Besides the general market sentiment, it seems the newly launched Bitcoin ETFs have accelerated the selling pressure in COIN.

Will the increasing adoption of Bitcoin ETF prolong this correction or embrace a higher rally?

Impact of Bitcoin ETF Launch on Coinbase

Coinbase (COIN) Stock| Tradingview

On January 11th, the cryptocurrency celebrated the launch of the 11-Bitcoin ETF after a decade-long wait. Despite the initial enthusiasm surrounding this launch, it didn’t catalyze a new recovery phase for the underlying asset, Bitcoin. Instead, this event may have hurt the Coinbase stock price, which witnessed a 6.75% decline on the same day.

Since then the COIN stock price has seen an accelerated correction as potential investors must have shifted to ETF products rather than direct exposure to BTC through exchange due to higher fees.

A recent insight from the analytics firm Santiment underscores a similar trend, as noted in a recent post on [X platform], indicating that Bitcoin’s wallets holding more than zero coins continue to decrease nearly four weeks following the SEC’s approval of 11 Spot ETFs. This trend can be linked to widespread fear, uncertainty, and doubt among investors, alongside a diminishing interest in owning Bitcoin directly, as other investment options become more appealing.

📉 #Bitcoin’s wallets (with greater than 0 coins) are still declining as #crypto nears 4 weeks since the #SEC’s 11 Spot #ETF approvals. This can be attributed to crowd #FUD, and less interest in direct $BTC ownership due to other investment alternatives. https://t.co/tjnjELxGw1 pic.twitter.com/xRymU7C0ro

— Santiment (@santimentfeed) February 7, 2024

Moreover, the average daily spot trading volume on Coinbase has declined to $1.9 billion from $2.5 billion in the 30 days before the introduction of the ETF, as reported by Mizuho analyst Dan Dolev.

This must have a significant effect on the revenue stream that Coinbase uses to gather from Bitcoin transactions.

Will Coinbase (COIN) Stock Continue to Fall?

While the introduction of Bitcoin ETFs could significantly influence Coinbase’s revenue, the exchange could stem from the fees it accrues through providing Bitcoin custody services for ETF providers.

Therefore, it’s premature to determine whether Bitcoin ETFs will lead to a substantial correction in Coinbase’s stock price (COIN). From a technical perspective, COIN’s price is maintaining its ground above the critical support level of $115 and the 50% Fibonacci retracement level.

This type of pullback is often viewed as a healthy correction, allowing an asset to rejuvenate its previously waning bullish momentum. If COIN’s stock forms a bullish reversal pattern at this support level, it could signal an opportunity for buyers to drive the price upwards towards the prospective target of $137.5, with the next aim at $161.