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Why Coinbase (COIN) Stock Is Trading Lower Today

Why Coinbase (COIN) Stock Is Trading Lower Today

Shares of cryptocurrency exchange Coinbase (NASDAQ:COIN) fell 5.1% in the morning session after stocks with exposure to the cryptocurrency space declined as momentum in the cryptocurrency market weakened following a strong rally that began in the weeks leading up to the November 2024 election. Investors had been hoping for regulation. More convenient under new management. Although the victory of the incoming Trump administration was initially viewed positively, the market now appears to be looking for new catalysts to maintain its momentum. In addition, profit taking by investors may contribute to deflation. Notably, Bitcoin – the largest cryptocurrency by market capitalization – fell by more than 10% after reaching a record high of $106,000 on December 16, 2024.

The stock market overreacts to news, and a significant drop in prices can provide good opportunities to buy high-quality stocks. Is now the time to buy Coinbase? Access our full analysis report here, it’s free.

Coinbase shares are very volatile and have seen 79 moves of more than 5% over the past year. In this context, today’s action indicates that the market considers this news meaningful but not something that will fundamentally change its outlook on the business.

The previous big move we wrote about was 12 days ago when the stock rose 6.1% on news of major indexes rising, with the Nasdaq up 1.4%, while the S&P 500 rose 0.7% after the Bureau of Labor Statistics reported its CPI. . (Consumer Price Index) for November 2024, which was in line with expectations. The CPI rose 0.3% from the previous month, while headline inflation rose 2.7% year over year, approaching the Fed’s 2% target but not quite there yet. The market reaction suggests that investors interpreted the report as a signal for the Fed to cut interest rates, reinforcing expectations of a 0.25% cut at the December 2024 meeting.

As a reminder, the driver of a stock’s value is the sum of its discounted future cash flows to date. The result of lower interest rates, all else being equal, is higher stock valuations. This is especially true for high-growth stocks, such as those in the technology sector, where the present value is more dependent on cash flows many years into the future.

Coinbase is up 71.3% since the beginning of the year, but at $268.74 per share, it is still trading 21.8% below its 52-week high of $343.62 as of December 2024. Investors who bought $1,000 worth of Coinbase shares in the IPO In April 2021 you will now be looking at an investment of $818.63.

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