Summary Coinbase Global looks to be a Sell/Avoid currently due to an evolving downturn in the cryptocurrency world since March. The Ease-of-Movement indicator for Coinbase and other Big Tech stocks is showing a bearish reversal, signaling the potential for significant price declines the rest of 2024. With a stretched boom valuation, COIN is quite susceptible to the switch in supply/demand dynamics, as buying interest wanes. I have suggested Coinbase Global, Inc. ( COIN ) as a Strong Sell several times over the previous nine months, with my latest article posted in March here . Not only has the cryptocurrency world been in a downturn since the spring, but technically speaking, selling volumes in Coinbase have started to overwhelm buying interest over the past month. Seeking Alpha - Paul Franke, Coinbase Global Sell Article, March 13th, 2024 Believe it or not, Coinbase is yet another stock witnessing a big dump in the 14-day Ease of Movement indicator. I have talked about similar bearish reversals in momentum at other names since the spring, including Advanced Micro Devices ( AMD ) here , Meta Platforms ( META ) here , NVIDIA ( NVDA ) here , Microsoft ( MSFT ) here , Amazon ( AMZN ) here , Apple ( AAPL ) here , and Tesla ( TSLA ) here . It is honestly a little scary for the market's current condition, with many trading patterns looking like kissing cousins of the late 2021 to January 2022 top trades in Big Tech, before the -30% stumble in NASDAQ 100 equities into the first week of 2023. Effectively, huge drops to 52-week lows or even all-time lows in the EMV calculation can pinpoint a vacuum of buyers, in terms of supply/demand dynamics. The tell from this momentum indicator is very minor sell volumes are able to create outsized price declines for the stock. So, what happens if the absence of buying continues, while sell volumes pick up? Price is forced to decline to find supply for transactions. My view is the wicked reversals and deeply red readings for the EMV are screaming at smart investors to sell and/or avoid buying the Big Tech names, including crypto-related businesses until lower quotes appear. For Coinbase specifically, cryptocurrencies like Bitcoin ( BTC-USD ) have been outlining very ugly charts since April. If a monster selloff in cryptos is next, Coinbase's position as a leading exchange will come under greater scrutiny as sales and profits move backwards. Sitting in a position of clear overvaluation at a major market peak will also not play out well for shareholders. Weakening Charts The focus of this story is tracking movements in the 14-day Ease of Movement creation, especially large negative numbers. In early August, COIN's EMV number hit a 52-week low (and its worst overall reading since December 2021). Below I have circled in gold this occurrence and the previous EMV 52-week low reached during the middle of April (also circled in gold). This bearish setup is in addition to other momentum indicators turning over or moving into sell territory since March. For example, the On Balance Volume indicator peaked in early March, and the 20-day Chaikin Money Flow reading has been red for three weeks running. StockCharts.com - Coinbase Global, 12 Months of Daily Price & Volume Changes, Author Reference Points In terms of crypto chart zigzags, Bitcoin's chart appears to be primed for a drop below US$50,000 in coming months. The equivalent EMV momentum setup is equally (if not more) bearish than Coinbase's pattern. Bitcoin has hit four new 52-week lows in the standard Ease of Movement calculation since March (circled in gold again). Plus, the reversal from a new EMV 52-week high to low in July-August is quite worrisome. On top of this situation, Bitcoin's price is staying below both its 50-day and 200-day moving averages. If you are bullish on Bitcoin, you have to be praying for a rally over $65,000 into September to right the ship. StockCharts.com - US$ Bitcoin, 12 Months of Daily Price & Volume Changes, Author Reference Points The last gigantic drop in the EMV indicator for Coinbase was during December 2021 (circled in gold below). The EMV sharply reversed from an all-time high in November to a record low four weeks later. This action can be very bearish in a bubble stock or one that has experienced a sizable runup beforehand. You can review how COIN was hit by high-volume selling during 2022, with price falling another -85% into December of that year from the EMV sell signal 12 months prior. StockCharts.com - Coinbase Global, Daily Price & Volume, April 2021 to Dec 2023, Author Reference Points Final Thoughts Current Wall Street analyst forecasts are calling for flat to rising cryptos with only minor improvement in Coinbase operating results in future years. For sure if the tide turns bearish for cryptocurrencies, COIN selling for 40x peak earnings (mostly generated by the rise in company-held cryptos) and 9x sales is not for conservative accounts or the faint of heart. Seeking Alpha Table - Coinbase Global, Analyst Estimates for 2024-26, Made August 16th, 2024 My view: if cryptos are about to be hit by major selling, Coinbase's business prospects will implode. The current Seeking Alpha Quant Valuation Grade of "D-" may prove overly optimistic, given operating results slide in 2025-26. Seeking Alpha Table - Coinbase Global, Quant Valuation Grade, August 19th, 2024 I remain in the Strong Sell camp for a Coinbase Global rating, using a 12-month outlook. Transitioning from purely a boom overvaluation story early in 2024, the chart momentum setup is now screaming loudly to get out of the way before the next cryptocurrency bust arrives. Shareholders must understand a return trip to $100 or even $50 is not impossible, similar to early 2023's price. It's too much risk for me. I cannot afford to take a -50% or -75% hit on my money, especially when the technicals are this bad as a red-flag warning. Thanks for reading. Please consider this article a first step in your due diligence process. Consulting with a registered and experienced investment advisor is recommended before making any trade.
