The Bitcoin market has experienced some significant changes recently, mainly due to massive selling actions by large Bitcoin players. These large investors chose to sell some of their holdings to realize gains when Bitcoin prices were near all-time highs. Bitcoin whales and other large holders, such as Germany, have reportedly sold billions of dollars in Bitcoin recently.
The selling strategy by large Bitcoin holders is a tactical move aimed at taking advantage of rising prices to liquidate part of their investments. At the same time, Bitcoin miners face rising operating costs and regulatory uncertainty, which has exacerbated the volatile market.
Despite the decline in Bitcoin prices, Coinbase is still doing well as a major provider of Bitcoin custody services. As of June 19, Coinbase controls about 4% of the circulating supply of Bitcoin, or 890,000 BTC. Coinbase is also ready to become one of the custody partners for the spot Bitcoin ETF, which will further enhance its market position.
Coinbase's dominance in the industry and its diversified revenue base are clear to see. The most recently released revenue data shows that Coinbase's revenue reached $1.64 billion as of May 2024, a year-on-year increase of 111.98%, far exceeding the expected $265.79 million. With this success, I believe that Coinbase's earnings per share will continue to grow significantly, making it a strong buy.
Despite the range-bound nature of Bitcoin prices, institutional investors have seen a clear increase in investment in crypto funds, especially Bitcoin ETFs. This suggests that while sentiment may be low, large investors remain bullish on the market. It is expected that in the future, as the cryptocurrency market continues to expand, Coinbase and similar companies will continue to benefit from this trend.
Overall, despite the market's expectation that Bitcoin prices may continue to fluctuate in a range, Coinbase is well prepared to cope with future market challenges through its strong growth and diversified revenue sources, which means that its stock may continue to trade at a premium in the future.
