Bitcoin

Coinbase stock plummets. What does this mean for Bitcoin?

Coinbase stock plummets.  What does this mean for Bitcoin?

Key points to remember

  • Coinbase’s COIN starts the week by recording a new all-time low of $150.42.
  • Prices may fall in search of support.
  • Bitcoin must hold above $37,500 to avoid the same outlook.

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Coinbase saw the market value of its COIN stock drop to an all-time low, raising the risk of further losses. Although Bitcoin continues to hold above support, such pessimism may affect its price soon.

Coinbase crash is a disaster for Bitcoin

Since Coinbase went public in April 2021, its stock market performance has been strongly correlated with Bitcoin. After a recent decline in the price of COIN, the major cryptocurrency could also suffer due to the close relationship between the assets.

Coinbase saw its stock drop to a new all-time low of $150.42 on Monday. The US cryptocurrency exchange, whose business model and outlook is heavily dependent on Bitcoin’s performance, has been stuck in a downtrend since early November 2021. As the broader crypto market has fallen, it has lost almost 60% of its market value. After suffering significant losses, it looks like its price might go down.

COIN broke through a well-established support level at $164. Now, the Fibonacci retracement indicator, measured from the May 19, 2021 low of $208 to the November 9, 2021 high of $368.90, suggests the stock could fall to form a new low at $141. . However, if this point of interest does not serve as a strong anchor, the stock could dip towards the $100 psychological support level.

Source: TradingView

A pessimistic outlook for COIN could have a significant impact on Bitcoin given the high correlation coefficient of the two assets. Ever since Coinbase went public via a direct listing, its price action has largely mirrored the market value of BTC. Nevertheless, the recent decline suffered by COIN has not been reflected in the flagship cryptocurrency.

It remains to be seen how the markets will behave after today’s open and if Bitcoin could follow suit.

Coinbase vs Bitcoin Price Chart
Source: TradingView

It should be noted that a spike in selling pressure could result in significant losses for Bitcoin. The 200-day moving average at $37,500 on the 3-day chart is the most important support level for BTC. Violating this demand zone could result in a steep drop to $28,700. For this reason, Bitcoin must hold above $37,500 to have a chance of breaking the 100-day moving average at $45,000.

Bitcoin Price Chart
Source: TradingView

Disclosure: At the time of writing this article, the author of this article owned BTC and ETH.

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