Cryptocurrency has taken the world by storm. As countries begin to establish regulations around crypto assets, the awareness and interest from investors is only rising.
El Salvador has already made Bitcoin legal tender and plans to build the world’s first bitcoin city. Many other countries will follow suit and amidst all of this, Coinbase (NASDAQ: COIN) is set to gain. The platform that allows users to buy and sell crypto assets is consistently growing and attracting users to its portal. The stock has risen 42% in the past six months; it was $233 back in May, and today, it’s $332. I believe the stock has strong potential to go higher in the coming months, and there are several catalysts that will work in its favour. Let us take a look at them.
Consistent revenue growth
Coinbase is the largest cryptocurrency platform globally, and the revenue and trading volumes are proof of this. The platform has managed to report solid revenue in all three quarters. Interestingly, the impact of the price movement in crypto assets does not directly impact the stock. Coinbase makes money through trading fees, which means that trading volume impacts the bottom line and not the actual price of the crypto asset. Hence, COIN stock has nothing to do with Bitcoin price but will benefit whether users buy or sell it. A jump in the price of Bitcoin will increase the commission earned by Coinbase.
The company is consistently making efforts to add new users and new crypto assets to the platform. This will lead to a rise in trading volume and commission. The users on the platform increased by 87% year over year and hit 73 million in the third quarter. The increase in users led to a rise in trading volume which increased by 627% year over year. As long as the company continues to grow its user base and trading volume, it will generate revenue consistently.
The crypto industry is growing, and these numbers are proof that it is here to stay. Coinbase is constantly adding new assets to the platform to make it easier for users to trade. It does not have to incur massive operating expenses due to the unique business model, reflecting on the bottom line. Additionally, the growth of trading volume shows the global adoption of crypto as an asset.
The Bottom Line
Coinbase launched at $250 a share and is soaring higher each quarter. The company certainly has something unique to offer the customers, making COIN stock hot property. The best thing about investing in Coinbase is that the company is not directly impacted by the movement of any particular crypto asset but the overall market in general.
In the long term, the only risk associated with Coinbase is a change in regulation or a disruption of the crypto market, and it does not look like that is happening anytime soon.
If you do not want to put your money in a crypto asset, consider COIN stock an ideal alternative. The future looks bright, and the fundamentals are impressive. COIN stock could be going to the moon in the coming months. Until then, it is time to cash in on the crypto trend.