Today’s 3% Rise in Coinbase Stock Is Just the Beginning.

Coinbase Stock NASDAQ:COIN

Coinbase Stock (NASDAQ:COIN)

Coinbase stock has risen by 3%, making it the best-performing cryptocurrency exchange today. The U.S. dollar is showing symptoms of cooling down, and this move coincides with a general rebound in the markets.

Within 24 hours, the whole cryptocurrency market increased by 3.7%, while the Nasdaq exchange surged by 0.7%. Coinbase (NASDAQ:COIN) derives most of its income and profits from trading volumes from regular investors. It should expect a brighter future due to the current bull market and the ensuing outsized gains for more volatile stocks and tokens.

Even yet, this controlled cryptocurrency exchange isn’t without its flaws. Pressure on monopolistic marketplaces like Coinbase (NASDAQ:COIN) may increase if the White House’s proposed framework for regulating cryptocurrencies changes in the future. Veritaseum, a blockchain business, has issued a patent infringement action against Coinbase and others, seeking $350 million in penalties for infringing on its patent.

What’s the Reason?

When it comes to equities that momentum traders have been able to ride this year, Coinbase stock is up there with some of the most volatile. Coinbase stock has risen by a more significant margin than the market during market recoveries from bear markets. The reverse has been confirmed during recessions.

Most of the recent buzz around Coinbase, unfortunately, has been negative. Coinbase (NASDAQ:COIN) relies on transaction fees to generate revenue, so regulatory and macroeconomic obstacles that drive down crypto prices aren’t ideal. The amount of money moving through Coinbase is frequently used as a barometer of potential future transaction volumes. While today’s surge in Coinbase stock is welcome news for bulls, it seems that volatility will be the norm for Coinbase and its competitors for the foreseeable future.

What’s Next?

Suppose today’s surge with Coinbase stock is any indication. In that case, we may see the beginning of another nasty bear market rebound to the upside. Some Federal Reserve officials have raised concerns that the pace and magnitude of recent interest rate increases may be excessive. For this reason, the market may reevaluate all risk assets if there is a change in the monetary policy position.

A further danger is that Federal Reserve Chair Jerome Powell will stick to his current course, which risks lowering inflation at the expense of the economy. The market is beginning to factor this in, although many analysts still predict more declines.

Coinbase stock rise today indicates what I expect to be a tumultuous future for this company over the coming several quarters, regardless of who is accurate about their medium-term prediction for the economy. Therefore, the bull argument for why this stock may be a terrific opportunity to play a Fed pivot or a bear market resurgence is compelling. I find its current volatility level too high for my comfort level.

Featured Image-  Megapixl @ Malirvik

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About the author: I'm a financial journalist with more than 1.5 years of experience. I have worked for different financial companies and covered stocks listed on ASX, NYSE, NASDAQ, etc. I have a degree in marketing from Bahria University Islamabad Campus (BUIC), Pakistan.