Coinbase Stock Forms Alarming Pattern as Competition Risks Rise

Coinbase stock price is stuck in a deep bear market after plunging from the year-to-date high of $447 in July to the current $240. This crash may have more room to run as the stock forms an alarming death cross pattern and competition in the industry intensifies.

Coinbase Stock Price Has Formed a Death Cross Pattern

Technical indicators suggest that the COIN stock price has more room to decline in the coming day as headwinds intensify. The daily chart shows that the stock peaked at $447 earlier this month and then initially dropped to the key support at $292,

The stock then rebounded but found resistance at the key level at $402, its highest level in October this year. It then started its downtrend and moved to the current level at $240.

The stock has recently formed the risky death cross pattern, which happens when the 50-day and 200-day Exponential Moving Averages (EMAs) cross each other. Historically, this death cross often triggers more downside in an asset because it signals that bears are gaining momentum.

Indeed, the Coinbase stock price jumped by over 65% the last time it formed a golden cross pattern in May this year. A golden cross is the opposite of the death cross pattern.

COIN stock has also remained below the Supertrend and the Parabolic SAR indicators, which is a highly bearish sign. Additionally, the Relative Strength Index (RSI) has fallen below 50, while the MACD indicator remains below zero.

Therefore, it will likely continue falling, a move that will be confirmed if it drops below the support at $231, its lowest point in December. A move below that level will invalidate the double-bottom pattern, which is a common bullish reversal sign.

The next psychological point to watch will be at $200, which is also slightly below the 78.6% Fibonacci Retracement level.

Coinbase is Facing Elevated Competition Risk

COIN stock price faces substantial fundamental risks. One of the most notable trends is the rising competition in the United States. Binance has relaunched its solutions there, while OKX is planning to launch its services there.

Additionally, more large American companies with millions of customers are planning to launch crypto services. The first notable one is SoFi, a giant company with millions of customers, who love it for offering its super app.

Last week, JPMorgan, the largest American bank, announced that it is considering launching cryptocurrency services to its institutional clients. This business may disrupt the high-value customers who use Coinbase today.

Charles Schwab, another large company with millions of customers, will also launch its crypto trading services in the first quarter. Therefore, there is a likelihood that some of these companies will take some of Coinbase’s customers.

Crypto Market Crash and Volume

Coinbase’s stock price will also face the challenge of declining volumes on exchanges due to the crypto market crash. Data compiled by CoinGlass shows that the 24-hour volume in exchanges dropped to $163 billion today.

The volume in the crypto industry has been in a downtrend since peaking at $748 billion in October. This is important because Coinbase generates substantial sums of money from transactions, which are likely to drop.

The same is happening in the futures and options market, an industry where Coinbase is aiming to gain share. Data shows that the futures open interest has dropped in the past few months.

These numbers explain why analysts are not optimistic about the company’s earnings. Data compiled by Yahoo Finance indicates that the company’s revenue is expected to be $1.95 billion in the current quarter, representing a 14% decrease from the same period last year. Most notably, its earnings per share (EPS) are expected to come in at $0.93, down from the $4.68 it reported last year.

To sum it up, Coinbase stock is facing major technical and fundamental headwinds that may drag it much lower in the near term.