The end of the consolidation signals new market moves

There’s no denying that stocks are a strong market right now. The benchmark S&P 500 index has been making high after high since before Christmas, and there are growing signs that the Fed is beating inflation.

With such risk appetite sweeping the markets, many stocks that had reached such high levels before the 2022 crash are back in vogue. One of these titles in particular is Coinbase Global, Inc. NASDAQ: MONEY, the digital cryptocurrency exchange. Its shares have been on the upswing for over a year now, but even with a 700% rally, they’re still nowhere near the highs of its 2021 IPO.

Links with Bitcoin

This just goes to give you an idea of ​​how hard some of these growth-focused tech stocks have been hit and how much potential some of them still hold. Coinbase investors and many analysts covering the stock are looking for further upside from here.

Much of Coinbase’s upside, past, present or future, is tied to the performance of Bitcoin. As the largest and most well-known cryptocurrency, it is safe to say that every time Bitcoin sneezes, Coinbase catches a cold.

The same goes for the reverse, though, and it’s no coincidence that Coinbase’s incredible recovery has largely mirrored that of the largest cryptocurrency. Bitcoin is consolidating with some healthy sideways action after posting gains of over 350% since 2022. 60% of those have come this year alone and, technically speaking, it looks like Bitcoin is on the verge of bursting at the seams. new on the rise.

Reasons to be optimistic

Assuming this happens, investors should expect Coinbase to follow suit. It too has been trading in a tight range since early March, and the daily range is indeed narrowing. A pattern of higher highs is also building against a strong resistance layer around the $270 mark. It’s like shaking a can of soda; it will eventually explode.

Last week, the Oppenheimer team reiterated its Outperform rating and raised its price target to $276. This is now a high-level target and bodes well for Coinbase’s performance in the near term. Analysts worry that Coinbase may be overly exposed to Bitcoin’s performance and has already overextended its profitability. And with a price-to-earnings (PE) ratio of 700, it’s hard to disagree with them.

Piper Sandler, for example, this week reiterated its Neutral rating on Coinbase stock, while teams at Barclays and Bank of America both gave the stock an Underweight Bearish rating. There is no doubt that, like cryptocurrencies in general, it is a controversial topic among analysts and investors alike.

Getting involved

But the proof is in the pudding, or in this case, the stock’s performance, and there’s no escaping the fact that Coinbase stock has defied gravity and these bearish analysts alike. If Bitcoin manages to break out of its current consolidation phase and head towards the blue territory near or above $80,000, there is every reason to think that Coinbase will find itself trending northward.

It will take a certain type of investor with a particular appetite for risk to get involved in a stock that holds some sell ratings from Wall Street heavyweights. However, the fact that Coinbase has been toned down somewhat in recent weeks hasn’t done any harm, as this has allowed the stock’s relative strength index (RSI) to retreat from extremely overbought readings in the 80s to a level much more tempting. 55. Whereas the last few weeks might just be the last quiet ones Coinbase stock will have for some time.

Before considering Coinbase Global, you’ll want to hear it.

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