For a while there, things weren’t looking good for Bitcoin (BTC-USD) in general. Cryptocurrency stocks like Coinbase (NASDAQ:COIN) were also poised to take it on the chin. But in Tuesday’s trading, Coinbase finished up 12.84%, a huge day for the stock. What happened? Turns out that Bitcoin happened and kept going to build on earlier successes.
It was just about a week ago when we noted that Coinbase, along with several other Bitcoin stocks, were propelled along by the success of Bitcoin. Bitcoin is considered by many to be a generalized barometer of the entire cryptocurrency field, from the various coins themselves to those who are involved in their production and dissemination. In that way, Bitcoin is a lot like gold in the cryptocurrency market. When gold prices improve, gold miners and heavy equipment makers will also often improve.
Now, with Bitcoin making a viable play for $31,000 per coin, as Fidelity Investments is readying an application to create a Bitcoin ETF, those connected to Bitcoin and cryptocurrency, in general, are seeing gains themselves. Of course, it’s not just surging Bitcoin that’s giving Coinbase an edge. Coinbase is also coming out as one of the leading voices calling for regulation of cryptocurrency in the United States, a move which will likely convince some skeptics that this is not all a Wild West/money laundering operation. Further, Coinbase also backed Hut 8 Mining (NASDAQ:HUT) with up to $50 million in loans to work more closely with a significant producer.
Despite these moves, analysts are almost perfectly split on Coinbase’s likely future. With seven Buy ratings, eight Holds, and six Sells, Coinbase is rated a Hold by analyst consensus. Further, with an average price target of $57.71, Coinbase stock offers its investors 17.43% downside risk.
