Coinbase Global (NASDAQ:COIN) is among the best-known platforms where people can buy and sell Bitcoin (BTC-USD) and other cryptocurrencies. However, troubles in the world of crypto have put negative pressure on COIN stock. The end result, though, should be much higher prices for Coinbase shares over the coming years. That’s because more credible exchanges will rise to the top while the lesser competitors will fade into obscurity and notoriety.
Unfortunately, Coinbase has been caught up in a broad-market growth-stock rout this year. High dollar inflation should make cryptocurrency look better in comparison. Yet, inflation has also prompted the Federal Reserve to raise interest rates, and risk-on assets are out of favor at the moment.
Thus, Bitcoin and COIN stock have fallen sharply from their 2022 peaks. A scandalous event in the cryptocurrency space added to investors’ anxiety, but the story isn’t over yet. In the end, Coinbase should emerge as a winner, and in time, crypto-focused assets will earn trust among skeptical traders.
What Caused the Drop in COIN Stock?
Just like many other U.S. businesses, Coinbase has had to deal with elevated inflation and interest rates. And, like a number of companies, Coinbase has been compelled to lay off some staff members.
Layoffs aren’t encouraging in the short term, but they show that Coinbase is serious about implementing cost-cutting measures. What really prompted the recent selloff in Bitcoin and COIN stock, however, was a scandal revolving around rival cryptocurrency exchange FTX.
The Wall Street Journal had reported that FTX was in talks to potentially be acquired by another crypto exchange, Binance (BNB-USD). However, that acquisition never happened. It’s hard to blame Binance for walking away from the deal, since FTX was allegedly unable to fulfill its customers’ withdrawal requests in a timely manner.
This created a crypto credibility problem, and the Bitcoin price crashed. COIN stock investors suffered collateral damage, even though Coinbase didn’t cause the credibility problem.
Coinbase Will Emerge as a Cryptocurrency Market Winner
This was a relief rally but also a flight to safety as investors favored more credible and transparent cryptocurrency platforms like Coinbase. Scary as it was, this shakeout means that high-quality exchanges can emerge as winners.
Just as importantly, winnowing out less reliable platforms means that the cryptocurrency and blockchain space can gain trust among institutional investors. So, believe it or not, FTX’s troubles should funnel big-money investors into a better regulated and managed platform like Coinbase.
Prepare for COIN Stock to Reach $300 in 2025
The flight to quality in the cryptocurrency space won’t happen overnight. If you’re willing to HODL (hold on for dear life), however, then a confident stake in Coinbase shares should provide strong, long-term returns.
Bear in mind, COIN stock has been as high as $350. Hence, it’s not unreasonable to conclude that the shares can return to the $300s by 2025. It’s not a guarantee but a probable outcome as the crypto shakeout enables Coinbase to stand out as a premier, trustworthy digital-asset exchange.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.