Coinbase Stock Price Crash Continues: Buy the Dip or Sell the Rip?

Coinbase stock price has suffered a harsh reversal leading to a $25 billion wipeout as its market capitalization plunged from $106 billion to $81 billion. COIN crashed for 12 consecutive days, falling to the lowest swing since June 23rd. So, will the stock continue falling or will it bounce back?

Coinbase Stock Price Plummeted After Weak Earnings

The recent Coinbase share price crash mainly occurred because its Q2 results showed that its business had deteriorated.

Most analysts expected its results to be weak because of the crypto downturn during the quarter. However, the results showed that the situation was worse than expected.

The numbers revealed that Coinbase’s transaction revenue dropped from $780 million in Q2’24 to $764 million in Q2’25. It is common for the transaction figure to drop during a crypto downturn as most investors often stay away from the market.

Coinbase has invested heavily in diversifying its business from transaction-based revenue. It has launched a thriving stablecoin business, earning most of its cash from USDC. It also owns Base, which has become the biggest player in the layer-2 industry.

Coinbase also makes money from staking rewards and its growing custody business. All these businesses are categorized into subscription and services and are often more stable. The segment made $655 million in revenue, up from $599 million in the same period last year.

Coinbase stock price also crashed after the company revealed that its growing custody business, which had $245 billion in assets, slowed down in Q2. The management blamed this to the lower blended fee rates and lower Bitcoin prices during the quarter.

Most importantly, the company has continued to boost its expenses, contributing to lower profits. It increased its employee count from 3,486 in Q2 ’24 to 4,279 this year, resulting in a jump in OpEx to $1.52 billion.

The Bullish Case for the Coinbase Stock

There are reasons to believe that the ongoing COIN stock price plunge will be temporary and that it will bounce back soon. First, there is a likelihood that Bitcoin will bounce back after it formed the bullish break-and-retest pattern on Sunday.

The chart below shows that the stock dropped to $112,000, a notable level as it was the highest point in May. It also coincided with the ascending trendline that connects the lowest levels since April this year,

Additionally, the price was along the 50-day Exponential Moving Average (EMA). Therefore, there are signs that the coin will rebound, and reach its all-time high.

This move will benefit Coinbase stock because it is one of the biggest Bitcoin holders with 11,776 coins in its balance sheet. Also, a Bitcoin rebound will lead to more gains among altcoins, which will benefit Coinbase and other exchanges.

Another bullish catalyst for Coinbase’s stock price is that analysts are optimistic about its business rebounding in Q3. The average estimate among analysts is that its revenue will be $1.76 billion, up by 46% from Q3’24. The EPS is expected to be $1.28, up from $0.28 last year.

Further, the company will benefit as the Federal Reserve prepares to start cutting interest rates. Technology companies do well when the bank is slashing interest rates.

Coinbase Share Price Technical Analysis

The daily chart shows that the COIN share price has crashed in the past few weeks. It has already moved below the key support level at $348, the upper side of the cup-and-handle pattern.

The Relative Strength Index (RSI) has pointed downwards and is nearing the oversold level at 30. Therefore, the most likely scenario is where the stock drops and retests the 200-day moving average at $265 and then resume the uptrend.

Dropping to that level will be important as it will push the top oscillators, like the RSI and the CCI, to the oversold level.

Summary

Coinbase stock price plunged after it published its second-quarter earnings. Technicals suggest that the stock has more downside potential as panic selling continues. It will likely drop to the 200-day moving average and then resume the uptrend.