Short Trade Idea
Enter your short position between 373.02 (a minor horizontal support level) and 395.39 (yesterday’s intra-day high).
Market Index Analysis
- Coinbase (COIN) is a member of the S&P 500.
- This index is at or near record highs but climbs a wall of worry and remains vulnerable to correction.
- The Bull Bear Power Indicator of the S&P 500 shows a negative divergence.
Market Sentiment Analysis
The US-EU trade deal failed to inspire markets, as US-China trade talks continue. Investors await the outcome of the US Federal Reserve meeting tomorrow, where markets expect no change in interest rates. Q2 earnings might provide market direction and increase volatility. US President Trump noted that baseline tariffs for most countries will range between 15% and 20%. Still, markets appear to be no longer worried about tariff-related impacts and are instead betting on interest rate cuts. China reported its first export-related disappointment, a warning to markets that tariffs influence the economy.
Coinbase Fundamental Analysis
Coinbase is the world’s biggest Bitcoin custodian and the largest US-based cryptocurrency exchange with over 100 million users. It operates in over 100 countries, holds over $400 billion in assets, including over 12% of Bitcoins and over 11% of all staked Ether.
So, why am I bearish on COIN ahead of its second-quarter earnings release?
Coinbase does not adhere to the crypto-first mindset and trails Binance in products, services, and crypto lifestyle. Therefore, I see insufficient growth for COIN to justify its high valuations and current share price. It will remain the dominant exchange for US-based customers, but it will likely trail its international competitors.
Metric | Value | Verdict |
P/E Ratio | 71.33 | Bearish |
P/B Ratio | 9.23 | Bearish |
PEG Ratio | 112.91 | Bearish |
Current Ratio | 2.52 | Bullish |
ROIC-WACC Ratio | Negative | Bearish |
The price-to-earnings (P/E) ratio of 71.33 makes COIN an expensive stock. By comparison, the P/E ratio for the S&P 500 is 29.48.
The average analyst price target for COIN is 349.61. It shows the price has overshot its price target and has more downside potential.
Coinbase Technical Analysis
Today’s COIN Signal
- The COIN D1 chart shows price action inside a narrow bearish price channel.
- It also shows price action moving away from the 0.0% Fibonacci Retracement Fan level.
- The Bull Bear Power Indicator turned bearish.
- Trading volumes during selloffs have increased.
- COIN corrected as the S&P 500 rallied to fresh highs, a significant bearish development.
My Call
I am taking a short position in COIN between 373.02 and 395.39. COIN is the market-leader in the US and does not shy away from international acquisitions, but its valuations are excessive. The PEG ratio flashes a significant red flag, and I will follow the bearish price channel into the next horizontal support zone.
- COIN Entry Level: Between 373.02 and 395.39
- COIN Take Profit: Between 235.29 and 277.01
- COIN Stop Loss: Between 406.50 and 419.78
- Risk/Reward Ratio: 4.11
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