Coinbase stock emerges as Bitcoin’s greatest diversifier; here’s why

coinbase COIN bitcoin btc
“CoinbaseCard (Visa Debit) in my Hand with Bitcoin in the background” by wuestenigel is licensed under CC BY 2.0
  • Coinbase’s Q2 was a success, as the company registered impressive gains.
  • Bitcoin’s losses in Q2 did not affect the COIN stock.
  • The absence of correlation shows the possibility to use the COIN stock as Bitcoin’s diversifier.

YEREVAN (CoinChapter.com) – Coinbase leading crypto exchange, has reported substantial growth in the second quarter of 2021, despite the crypto market’s bearish incentive in the same fiscal period.

That is because Coinbase’s revenue in Q2 reached $2.2 billion, way ahead of estimates, while Bitcoin, its most traded digital asset, lost 42.8 percent overall in terms of market capitalization. As a result, the Coinbase stock, COIN, posed a great investment diversifier to Bitcoin.

Coinbase’s success

The exchange published the results of Q2 in August. Coinbase beat the Wall Street predictions on every turn and reported over a 1,000% yearly earnings boost. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) adjusted earnings came in at $1.15 billion.

Brian Armstrong, the chief executive of Coinbase, was optimistic about the results and commented during the Q2 2021 Earnings Call.

“Q2 was a really strong quarter for us. We had amazing growth in terms of users added to the platform, assets on the platform, revenue, just about everything”.

 stated the CEO.

The COIN stock price declined after the report’s release, while Bitcoin displays bullish price action again.

Coinbase stock price. Source: COIN on TradingView.com
Coinbase stock price. Source: COIN on TradingView.com

The Coinbase officials also stated that the volatility on the crypto market could reflect on the COIN stock, but the results of the report claim the opposite, as the crypto market suffered losses in Q2, led by Bitcoin’s decline.

Also read: Coinbase stock hits three-month high following 1,000% yearly earnings boost

Bitcoin’s Q2

The flagship cryptocurrency had a rough time after Q1, as both the price and the market cap declined drastically since April 2021. The chart below shows the BTC market cap stats throughout the year.

Bitcoin market cap stats: Source: Statista.com
Bitcoin market cap stats: Source: Statista.com

Bitcoin’s daily chart also showed bearish price action, while the token lost more than 40 percent overall in Q2.

Bitcoin's losses in the second quarter. Source: BTCUSD on TradingView.com
Bitcoin’s losses in the second quarter. Source: BTCUSD on TradingView.com

The outlook in the past two months was positive for BTC, but the alpha crypto has now entered a consolidation phase for the past week. Low rewards led traders to allocate their assets to other cryptocurrencies. Some experts believe that COIN could be a viable resorse to diversify a portfolio against Bitcoin volatility.

“On top of that, unlike Bitcoin, COIN actually earns and retains significant amounts of profits. As a result, all things being equal with each passing day, COIN’s intrinsic value will increase relative to Bitcoin’s which is a non-cash flowing asset”.

reported Samuel Smith, a crypto analyst from High Yield Investor.

Also read: Coinbase stock to soar to $316 per share, macro-financial analyst predicts

In conclusion…

…Coinbase acquires revenue from transactions on the platform. As long as the sheer number of transactions grows and the company collects the fees, the transaction vector (buy or sell) is not crucial. Thus, fluctuations of Bitcoin don’t affect COIN, as long as traders engage in any sort of transaction.

“As long as cryptocurrencies are being used and exchanged, COIN is set to see its value continue growing over the long term, even if Bitcoin’s price flounders”.

added Smith.

Also read: Japan’s Liquid crypto exchange loses $80M after hacker compromises hot wallets.

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