Congrats if you bought Coinbase Global Inc. (COIN) when I urged you to in January.
I predicted it would double this year.
It’s already doubled… and we’re only in July.
But if you haven’t bought Coinbase yet… don’t.
Instead… wait until August 3rd, then buy it.
Let me explain why this date is important… and why Coinbase’s stock stands a good chance of doubling AGAIN from August 3rd through the end of the year.
It filed lawsuits… seized assets… and shut down some crypto-linked banks.
This assault mortally wounded Binance.US, whose trading volumes have plunged 94%.
It forced Kraken, Gemini, and Crypto.com to halt certain services.
And Uncle Sam dropped the hammer on Coinbase, too.
Last month, the SEC (aka the stock market police) accused Coinbase of operating an unregistered securities exchange.
If found guilty, Coinbase would have been forced to shut its doors.
Instead… the exact opposite happened.
SEC Chairman Gary Gensler has been insisting that “most cryptocurrencies are securities.”
If he were right, it’d be disastrous for crypto because securities must comply with US securities laws.
These laws were written in the 1930s. They predate computers, never mind crypto. A crypto couldn’t follow these laws if it wanted to. Many have tried. All have failed.
In short, any token tarred with the “security” label would essentially be outlawed in the US.
The SEC charged crypto company Ripple Labs with selling unregistered securities for its XRP token in December 2020. If the SEC had won, it would have likely gone after dozens more cryptos.
But last week, after a two-and-a-half-year legal battle, a federal judge ruled XRP is NOT a security.
This is a HUGE win for all of crypto… and Coinbase, in particular.
This XRP ruling all but kills the lawsuit against Coinbase. The judge specifically said tokens trading on secondary markets (like exchanges) are not securities.
And not only has Coinbase been exonerated…
The SEC decapitated its rivals.
Coinbase is pretty much the only place left for Americans to buy and sell crypto.
Coinbase’s share of the US crypto market is now the highest on record. Roughly $1 out of every $2 flowing into crypto passes through its platform.
COIN jumped 25% on the big news and is now outperforming bitcoin this year:
BlackRock (BLK) controls roughly $10 trillion worth of assets, mostly through its “iShares” exchange-traded funds (ETFs). And it just did a major U-turn on bitcoin.
Five years ago, BlackRock CEO Larry Fink called bitcoin an “index of money laundering.”
Now, he wants to create the first bitcoin ETF.
BlackRock wants to make buying bitcoin as easy as buying Apple (AAPL) stock. This will pull billions of “new” dollars into crypto from folks who previously weren’t willing to set up a crypto account.
You might think this is bad for Coinbase.
But it will be a BIG win for the exchange if BlackRock’s ETF gets approved.
When you buy BlackRock’s ETF, your bitcoin won’t sit in a BlackRock vault. It’ll be held at Coinbase.
In financial gobbledygook, BlackRock uses Coinbase Custody—a service that allows financial institutions to store tokens in a secure wallet.
And Coinbase gets paid to take care of your coins.
Coinbase currently safeguards $50 billion worth of crypto today. Its custodial fees jumped 49% last quarter to $17 million.
And those fees are partially tied to crypto prices. If crypto prices jump, so too will Coinbase’s revenues.
Bottom line: A BlackRock ETF approval will equal millions of dollars in extra revenue for Coinbase.
No.
Wait until August 3rd.
Unlike in the traditional stock market, there’s no earnings season in crypto.
Blockchain tech—which underpins crypto—allows us to see financial data in real time.
Coinbase doesn’t report earnings for another two weeks. But because it runs on crypto rails, we can predict its numbers with a high degree of accuracy ahead of time.
Blockchain data shows the amount of crypto changing hands on Coinbase fell over the past three months. Since Coinbase gets most of its revenues from trading fees, it will likely report weak earnings.
I expect COIN to drop in the short term after earnings are announced in two weeks.
But over the next one to two years, bright skies are ahead.
I’m buying more Coinbase on any earnings dip.
Stephen McBride
Chief Analyst, RiskHedge
PS: Would you buy BlackRock’s bitcoin ETF? Let me know at stephen@riskhedge.com.
We’ve received several messages from readers regarding the “mind virus” Stephen says is affecting today’s youth.
One reader said:
“You’re right on the money, Stephen. As a doctor, I see 11- to 14-year-olds emotionally traumatized by YouTube, TikTok, Instagram, and other screen addictions and the poor choices motivated by these apps.” —Lachlan
Another wrote:
“Well said! I was thinking about this earlier today. I’ll be a grandfather soon; plan to share your email with my kids.” —Bill