Coinbase’s Bullish Reversal: A Sign of Profitability in 2024?

A Sudden Surge

In a remarkable turnaround, Coinbase Global Inc. has seen its stock value soar by 17% this week. This surge is a direct result of renewed confidence from market analysts in the company’s financial health.

Analysts Shift Perspective

Notably, Bloomberg highlighted a significant shift in opinion from JPMorgan’s analyst Kenneth Worthington. After a spike in Bitcoin’s value surpassing the $50,000 mark, its highest since 2021, Worthington adjusted his stance on Coinbase. Moving from a bearish to a neutral position, this change of heart comes after Bitcoin ETFs continued to perform robustly against market expectations.

Profit Predictions

Adding to the optimistic outlook, John Todaro from Needham & Co. has put forth a projection that Coinbase will declare a net income of $103 million for the fourth quarter. This is particularly noteworthy as it deviates from the consensus of a potential loss, as per a Bloomberg survey of other analysts.

Coinbase and the Crypto Bull Market

The company’s profitability is closely tied to market sentiment, which in bull markets leads to increased trading activity. This, in turn, boosts fee income for Coinbase. The final quarter was marked by a nearly 60% increase in Bitcoin’s price, capping off the year with an impressive 157% rise in value.

ETFs and Coinbase’s Future

The introduction of spot Bitcoin ETFs has been met with both enthusiasm and caution regarding their long-term impact on Coinbase’s business strategy. Despite the current bullish trend, the shadow of previous trading volume downturns looms over the company.

Recovering from the Crypto Winter

It’s been a challenging period for Coinbase since the onset of the crypto winter in early 2022. The collapse of significant market players like Terra Luna and FTX led to a sharp decline in the industry, forcing Coinbase to reduce its workforce significantly. But with the recent positive developments, there’s a glimmer of hope for a return to profitability in the near future.