HomeBusiness4 Reasons to Buy Coinbase Stock Like There's No Tomorrow

4 Reasons to Buy Coinbase Stock Like There’s No Tomorrow

Coin base (NASDAQ: MINT) has become the standard bearer for the crypto industry in the US. It outlasted rivals like FTX and saw Binance fined $4 billion and expelled from the country.

Now Coinbase is using its reputation and technical prowess to enter new markets and products such as derivatives, along with more mainstream products. It is the primary custodian of crypto exchange-traded funds (ETFs), it partners with major banks as a trading platform and custody for their customers, and developers build with Coinbase’s tools and on its Base blockchain. There are many reasons to buy Coinbase, but these stand out above the rest.

Person buying crypto on a mobile device.

Image source: Getty Images.

The adult in the room

Crypto has been plagued by scams and fraud for years, including FTX. Coinbase has slowly but surely built a reputation as a trusted party in the crypto ecosystem, acting according to the letter of the law or challenging the law when it is unclear, such as in the US.

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This means that Coinbase will grow more slowly during boom times, but is less likely to go bankrupt during downturns. And that trade-off has certainly been worth it for investors. Coinbase now dominates the custody business for billions of dollars of ETFs, and I think it will be an important partner for developers on the blockchain.

Wherever Coinbase goes, having a reputation as a trusted counterparty is a good position to be in.

A restorative exchange

Coinbase’s exchange business has been overrun by rivals in recent years as they offered more aggressive products and leverage. But as we have seen with FTX and Binance, aggression is not always a good thing.

Over the past year, Coinbase has regained market share and is currently ranked #2 globally behind Binance. Exchange sector revenue rose 64.3% to $529.3 million in the fourth quarter of 2023 and trading activity looks set to pick up again in 2024.

Coinbase’s advantage isn’t just in the consumer market. This has become a trusted partner for institutions, and I believe this will be key to the company’s growth.

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Stablecoins are a huge money maker

Coinbase was one of the creators of the USDC stablecoin, which has the seventh largest market capitalization of all cryptocurrencies. And Coinbase makes millions from the interest earned on the assets that back USDC.

In Q4 2023, Coinbase reported $171.6 million in stablecoin revenue, mostly from USDC. The company also has a stake in Circle, which manages USDC. As the use of stablecoins on the blockchain increases, Coinbase will be a winner.

Maximize use

Like many Silicon Valley companies, Coinbase has been cutting costs in recent years to adapt to lower revenues. And that now provides operating leverage for the company.

COIN Chart Total Operating Expenses (Quarterly).COIN Chart Total Operating Expenses (Quarterly).

COIN Chart Total Operating Expenses (Quarterly).

This influence should persist if sales growth continues into 2024. With revenue growth, stable operating costs, and potential upside from new products and long-term blockchain use cases, there’s a lot to like about Coinbase stock.

Should You Invest $1,000 in Coinbase Global Now?

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Travis Hoium has positions in Coinbase Global. The Motley Fool holds and recommends Coinbase Global. The Motley Fool has a disclosure policy.

4 Reasons to Buy Coinbase Stock Like There’s No Tomorrow was originally published by The Motley Fool

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