Why Coinbase Stock Is Up on a Dismal Day for Cryptocurrencies

What happened

Today, the entire cryptocurrency market is in turmoil. Overall, the cryptocurrency has lost 7.3% in the past 24 hours, as of 12:45 PM ET. The move follows yesterday’s Federal Reserve meeting minutes, which highlighted a faster-than-expected reduction in the Fed’s balance sheet and the possibility of a rate hike sometime in March. Risky assets have been under pressure for most of the past day, as investors rethink their short-term investment strategies.

With the cryptocurrency market now approaching the $2 trillion mark, investors may be concerned about any crypto-related investment. However, the famous crypto exchange Queen Piece (NASDAQ: currency) It was already up 0.1% as of 12:45 PM ET, brushing off those concerns.

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so what

Coinbase’s revenue stream is primarily generated from transaction-based fees. Accordingly, investors who think about how Coinbase stocks will perform over any period of time usually look at trends related to volume of transactions.

Obviously, when the crypto market is rising, the flow of buying activity is bullish for Coinbase shares. However, in the opposite scenario where the market declines, transaction volumes from cryptocurrency sales could increase. Thus, Coinbase is a crypto game that may provide a more defensive option in times of dangerous volatility in the crypto world, in an upside or downside direction.

Today, investors seem to view Coinbase shares much differently than the crypto investments available on its platform. It should be noted that this stock is still almost 45% below its 52-week high. Accordingly, those looking for affordable growth investments may view Coinbase stocks as a beacon of stability (in a relative sense) compared to most cryptocurrencies.

What now

The high crypto market is usually much better for Coinbase, as new investors are looking for easy-to-use options to get in on the action. However, with the cryptocurrency market becoming increasingly entrenched, it seems that investors are willing to take a longer look at Coinbase as a powerful shovel-picking game in the sector.

With volatility still high, Coinbase is a stock that investors might want to keep on their watch list for now. This is one I will be following closely, looking at Coinbase’s performance relative to the performance of the market as a whole.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of the Motley Fool Premium Consulting Service. We are diverse! Asking about an investment thesis — even if it’s our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.