Key Takeaways:
- A Mizuho analyst believes that COIN’s price rally is unsustainable.
- Coinbase issued a clarification regarding the discontinuation of services for Indian users.
- Coinbase shares dropped over 6% on Sept. 12.
NEW DELHI (CoinChapter.com) — Coinbase (NASDAQ:COIN) shares have had an impressive growth in 2023, but a Mizuha Securities analyst claimed that COIN might be due for a “reality check.“
Mizuho analysts led by Dan Dolev released a research report that has given Coinbase shares a ‘sell‘ rating. Dolev noted that Coinbase volumes have historically positively correlated with Bitcoin (BTC) price action.
For example, the COIN price peaked when the BTC price reached its record high in November 2021.
However, in 2023, COIN volumes and BTC prices stopped moving in tandem. Dolev blamed the change in correlation to the decline in retail crypto FOMO.
The Mizuha analyst noted that even the recent approval of the National Futures Association (NFA) to operate a futures commission merchant (FCM) might not help Coinbase. It means that Coinbase could provide crypto derivatives on its platform to US customers.
Furthermore, Dolev believes that “leverage associated with getting exposure to crypto via derivatives” might result in a decline in trading value. The analyst also noted that the average daily COIN volumes in Sept. have declined 25% from August 2023.
Retail investors losing interest in trading BTC when prices rise might become a problem for COIN since 95% of COIN’s transaction revenue comes from retail trades, Dolev said.
Coinbase Explains Reports Of Service Discontinuation In India
Meanwhile, Coinbase rushed to issue an explanation regarding reports of the exchange discontinuing its services in India.
In a Sept. 11 report, Techcrunch cited an email from Coinbase to users in India warning of ending its services by Sept. 25. However, the exchange later clarified that the warning was not for all users but for those who had breached Coinbase’s updated standards of service.
The exchange had stopped new user sign-ups in India in June, though the reports claimed it was a new development.
COIN Price Does Reality Check As Bears Move In
Coinbase bears entered the market after Mizuha labeled the stock as ‘sell.’ As such, COIN price would likely start trading on Sept. 13 with the bears in control, making it difficult for the bulls to continue the Coinbase share price rally.
Moreover, Coinbase stock prices have been moving horizontally since Sept. 8.
Though Coinbase shares started rising on Sept. 12, COIN price fell later during trading, resulting in the stock dropping 6.3% to a daily low near $80.5. If the selling continues, the COIN price might drop to the 100-day EMA (blue wave) and 200-day EMA (green wave) support confluence near $75.8.
Coinbase shares have been moving inside an ascending parallel channel since Nov. 2022. The stock’s price rose by over 122% YTD in 2023. However, failure of the confluence support might force the COIN price to drop to the support near $62.6, near the parallel channel’s support trendline.
Conversely, an uptrend might see Coinbase’s share price face resistance near $88. Moreover, breaking and consolidating above the immediate resistance might help COIN price target the resistance near $100 before retreating.
The RSI for COIN remained neutral, clocking a score of 50.89 on the daily charts.
