Coinbase Stock Surges As Island Reversal Fuels Uptober Rally

Coinbase stock price has rebounded this week. It jumped for five consecutive days and is now hovering at its highest level since July.

This article examines the potential upside of the COIN stock. Analysts believe the stock could climb further. It may even reach its highest level this year.

Coinbase Stock Price Exits Island Reversal

Coinbase stock price jumped and reached its year-to-date high of $444.70 in July this year. It then plunged and entered a bear market after publishing a weak quarterly report. That report revealed that the company’s revenue and margin growth stalled in the second quarter.

COIN stock then spent August and September in a deep consolidation. It remained inside the support and resistance levels at $290 and $344. This consolidation occurred as investors awaited a potential catalyst.

As The Market Periodical noted, the stock formed an island reversal pattern. This pattern occurs when an asset forms a gap and then moves sideways for a while. It resembles an island because it is usually suspended. It is a familiar reversal pattern that often leads to more gains.

The island reversal pattern has now been confirmed as it has moved above its upper side. Additionally, the stock has moved above the 50-day and 100-day Exponential Moving Averages (EMA).

Additionally, the Relative Strength Index (RSI) has been trending upwards and is approaching the overbought level. The most likely scenario is a continued rise in the COIN stock price. Bulls are aiming for the year-to-date high of $445.

This target is about 20% higher than the current level. The bullish Coinbase stock price forecast will become invalid if the stock price drops below the support level at $340.

Coinbase Stock to Benefit From Uptober Rally

One possible catalyst for the COIN stock price is that it may benefit from the potential Uptober rally in the crypto market. Most analysts believe that Bitcoin and altcoins will rally this month, as they often do in October.

Bitcoin price always rallies in October. Coinglass data shows that it has dropped by two years since 2013. It’s a sign that the trend may happen this year.

Bitcoin has already jumped to $120,000 this year. Also, there are rising odds that it will hit its all-time high of $124,200 this month. Altcoins such as Ethereum, XRP, and Solana have all experienced significant surges recently. Their rally has pushed the industry’s market cap beyond $4 Trillion.

Coinbase, as the largest crypto exchange in the United States, benefits from the ongoing rebound of the cryptocurrency industry. This leads to higher volumes.

One main reason that may boost crypto prices this month is that the Fed will likely deliver another interest rate cut. Odds of another cut rose this week after ADP published a weak private payrolls report. That number shows that the private sector lost over 32k jobs.

Altcoin ETF Approval to Be Bullish for Coinbase Shares

Coinbase stock price will also benefit from the potential approval of altcoin ETFs. Data indicate that most altcoin ETFs are expected to be approved this month. This includes funds tracking popular coins like XRP, Solana, and Hedera Hashgraph.

Such an approval will benefit Coinbase, as it has become the largest custodian in the crypto industry. It holds assets belonging to companies like BlackRock and Grayscale.

Coinbase is working to diversify its revenue sources from the highly volatile transaction segment. Its most recent results showed that the transaction revenue slowed to $764 Million. At the same time, its subscription nd services revenue rose to $655 million.

COIN stock price is on the cusp of a strong bullish breakout after exiting the island reversal point. This, along with the developments in the crypto industry, suggests that the shares have more upside. It could reach the year-to-date high of $445.

Still, there are potential risks to the thesis. For one, there is a possibility that this rebound is a dead-cat bounce or a false breakout, where an asset rises and then resumes the decline. Additionally, the company is likely to struggle as competition intensifies.