The Coinbase stock price has pulled back in the past seven consecutive days as the recent bullish momentum in the crypto industry faded. COIN dropped to $378 on Monday, down by 15% from its highest point this year. Technicals point to a strong rebound ahead of its earnings on July 31st.
Coinbase Stock Price Crash Could be a Buying Opportunity
The daily timeframe shows that the COIN stock price has plunged in the past few days, moving from a high of $445 to $377. This retreat happened as the Bitcoin price rally stalled and the coin remained at $118,000.
Technicals suggest that the pullback could be a good entry point as it happened after the stock became highly overbought, with its Relative Strength Index (RSI) peaking at 81. It is common for a highly overbought asset to pull back a bit as investors take a breather.
The retreat is also happening after the stock jumped above the important resistance level at $347.35, its highest swing in December last year. This price was the upper side of the cup-and-handle pattern, one of the most common bullish continuation signs.
Therefore, the ongoing pullback is a sign that the stock is forming a break-and-retest pattern. This is a situation where an asset makes a breakout above a key resistance level, retests it, and then resumes the bullish trend.
In this case, it jumped above the upper side of the cup and is now aiming to retest it. It also remains above the 50-day moving average and the strong pivot reverse of the Murrey Math Lines at $312.
Therefore, the most likely scenario is where the COIN stock price drops to $347 and then rebounds, possibly after its earnings on Thursday, July 31st.
The stock’s target price of $550 is estimated by first measuring the cup’s depth, which is about 57%, and then the same distance from its upper side.
Coinbase is Betting on Stablecoin Payments
Analysts believe that traditional payment companies will be disrupted by stablecoin payments, which are much cheaper and fast. For example, a company like PayPal takes over 2% of the transaction volume. It also takes more money from retailers using its unbranded platform.
Stablecoins like Tether (USDT) and USD Coin (USDC), on the other hand, are much cheaper than fiat and faster. A $10 million transaction on Base Blockchain can be free when using the Conbase wallet’s simple mode. Its gas fee outside the simple mode can cost $0.007.
Coinbase is working to become a major player in the industry. It recently launched The Base App (TBA), which it hopes will power these transactions. If successful, it will disrupt companies like PayPal and Visa.
COIN Earnings Ahead
The next important catalyst for the Coinbase stock price will be its earnings on Thursday. Analysts anticipate that Coinbase’s revenue will be $1.61 billion, up by 11.29% from the same period last year. The most optimistic analyst sees its revenue rising to $21 billion.
Coinbase’s revenue is then expected to rise by 40% in the third quarter to $1.7 billion.
The company is benefiting from its diversified business model. In addition to its transaction revenue, it has become the biggest player in the ETF custody business, holding assets for companies like BlackRock and Grayscale. This business will likely continue growing as the SEC approves more crypto ETFs.
Summary
The Coinbase stock price has pulled back in the past few weeks, moving into a technical correction after falling by over 10% from the year-to-date high. This plunge could be brief as the company publishes its financial results on Thursday this week.
It has formed a cup-and-handle pattern, remains above the 50-day moving average, and is doing a break-and-retest pattern. The company also has strong fundamentals as its business growth, especially its payment services, gains momentum.
