Coinbase Stock Faces Challenges: Is Base Blockchain the Key to 2025 Recovery?
Coinbase’s stock price has faced a significant decline over the past three weeks, mirroring the downturn in Bitcoin and other altcoins. After hitting a peak of $350 earlier this month, the stock has dropped nearly 25%, signaling a shift into bear market territory. With the rise of Base Blockchain in 2025, is Coinbase still a worthwhile investment?
Bitcoin and Altcoins Struggle: Impact on Coinbase Stock
The primary factor behind Coinbase’s stock decline is the poor performance of Bitcoin and other major altcoins, including Ethereum and Ripple. Bitcoin recently reached a record high of $108,000 before falling back to $95,000. Similarly, Ethereum faced resistance at $4,000 before dropping to $3,500.
As a major cryptocurrency exchange, Coinbase’s stock is highly correlated with the performance of Bitcoin and altcoins. Its stock tends to rise when Bitcoin experiences an upward trend, driven by two main factors:
- Coinbase’s Bitcoin Holdings: Coinbase holds a significant amount of Bitcoin on its balance sheet, with 9,480 BTC valued at over $882 million at current prices. This is a decrease from $1.08 billion when Bitcoin reached its all-time high.
- Higher Trading Volumes: Coinbase benefits from increased trading volumes when Bitcoin and altcoin prices rise, as the exchange earns a substantial portion of its revenue from transaction fees.
Historical Revenue Trends and Challenges
In 2021, when Bitcoin and altcoins surged, Coinbase experienced a record revenue of over $7.35 billion. However, the situation shifted in 2022 due to the Federal Reserve’s interest rate hikes and the collapse of companies like Celsius and Terra. Bitcoin’s price plummeted to $16,000, and Coinbase’s revenue dropped by more than 50%, falling to $3.1 billion. Despite this, Coinbase’s revenue rebounded to $5 billion in the trailing twelve months, driven by the crypto market recovery.
Another challenge Coinbase faces is increasing competition in the centralized exchange industry. Rival exchanges like OKX, Crypto.com, and Bybit have gained market share, largely because Coinbase has been hesitant to list some newly launched tokens.
Base Blockchain: A Potential Game-Changer for Coinbase
One major factor that could drive Coinbase’s recovery in 2025 is the success of Base Blockchain, a layer-2 network launched by Coinbase in 2023. In just one year, Base has grown to become the sixth-largest blockchain in the crypto industry, with a total value locked (TVL) of over $3.48 billion and bridged funds amounting to $14.7 billion.
Base has outperformed other established layer-2 networks like Arbitrum, Polygon, and Optimism. The network has consistently seen high transaction volumes, with decentralized exchanges (DEXs) on Base handling over $181 billion since launch and $12 billion in the last seven days alone.
Base Blockchain’s Future Potential
Base’s continued growth suggests it could receive a multi-billion-dollar valuation when it launches its token, possibly in 2025. Currently, Base is valued higher than networks like Cardano, with a market cap of over $31 billion, and Avalanche, which has a market cap of $15 billion.
Base’s valuation also exceeds that of Hyperliquid ($28 billion) and Eigen ($6 billion). Additionally, Arbitrum, the second-largest layer-2 network, has a fully diluted valuation (FDV) of $7.69 billion. Given these factors, an airdrop of Base’s token could provide a significant boost to Coinbase’s stock price.
Technical Analysis and Stock Outlook
Technically, Coinbase’s stock price has dropped to $265 and retested the handle section of a cup-and-handle pattern. It has remained above the 50-week Exponential Moving Average (EMA), a positive sign for potential future growth.
As crypto investors return after the holiday season, Coinbase’s stock is expected to rebound in January, especially if Base Blockchain continues its rise.
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