Coinbase Tumbles Amidst Market Turmoil, But Analyst Sees Potential Upside

Coinbase (COIN) stocks have declined 16% in the past five days, reflecting volatility in the crypto and stock markets. Crypto analyst Will Clemente suggests that investors may be missing potential buying opportunities due to undervaluing Coinbase's revenue streams, including its growing Ethereum layer-2 network, Base, which generates significant transaction fees. Despite strategic shifts towards a "crypto super app" model, traditional investors continue to view Coinbase solely as an exchange, potentially overlooking its long-term potential.

Coinbase Share Tumble Amidst Market Volatility, but Analyst Highlights Potential Upside

Coinbase (COIN), a prominent cryptocurrency exchange, has witnessed a significant drop in its share price, plunging 16% over the past five trading days. This decline mirrors the broader market volatility that has gripped both the cryptocurrency and stock markets. However, one analyst believes that investors may be overlooking a potential buying opportunity in Coinbase.

"The street isn't really pricing in the crypto native revenue that I think a lot of the crypto natives understand," remarked crypto analyst Will Clemente in a recent Unchained Crypto podcast.

According to Clemente, Coinbase represents a unique investment proposition akin to Tesla's venture-style bet in the public markets five years ago. He contends that traditional investors continue to perceive Coinbase solely as an exchange, despite its substantial business model transformations in the past 12 months.

"Throughout the bear market, they made a lot of strategic pivots to shift toward what I'm calling a crypto super app," Clemente asserted.

Clemente specifically highlighted Coinbase's Ethereum layer-2 network, Base, which boasts a total value locked (TVL) of $5.35 billion and processes an impressive 30.81 daily transactions per second.

"Over the last 30 days, Base has generated $30 million in top-line revenue for Coinbase just based on the sequencer fees, which annualizes out to like $360 million a year," he explained. Clemente suggests that traditional investors are failing to recognize the significant activity taking place on-chain.

"The street doesn't even know what Base is, and they're definitely not extrapolating out the potential of a ton of activity taking place there and the sequencer fees that Coinbase may benefit from," he emphasized.

At the time of publication, Coinbase shares were trading at $218.08, a decline of nearly 16% over the past five days, as reported by Google Finance data.

Cointelegraph anticipates that Coinbase will release its earnings report for the first quarter of 2024 in the coming weeks.

The broader market backdrop remains volatile, with the S&P 500 having shed 3.12% over the past five days and Bitcoin (BTC) recording a decline of approximately 4.67% in the same period. Meanwhile, geopolitical tensions in the Middle East are expected to exert further downward pressure on both markets following reports of explosions at Isfahan airport in central Iran.