As Bitcoin Falls and Ethereum Rallies, Coinbase Stock Comes Back

Key Points

• As the trading volume between Bitcoin and Ethereum spikes due to their price action, Coinbase stock is in the eye of the storm for new expansion.
• With the right fundamentals in place, and a hefty discount, investors can see this opportunity a mile away.
• Short sellers are exiting despite the stock's bearish price action recently, a sign of capitulation. 

How a business generates its revenue should be the first consideration for any investor considering a potential investment in a stock, especially in today’s uncertain world, marked by geopolitical conflicts and ongoing trade tariff negotiations. For this reason, understanding where risk appetites are headed is a key gauge for identifying the next potential “cash cow” in the market, so to speak. 

This one is at the center of one of the hottest areas for retail traders.

In cryptocurrency, two names stand out in terms of market capitalization and popularity. The benchmark in that asset class is Bitcoin, which is becoming more institutionalized and has seen its volatility fall yearly (making it less attractive for active traders).

On the other hand, there is the smaller Ethereum, which is still a volatile name in this space.

As it turns out, Bitcoin’s exposure to institutions also makes it a gauge for systematic risk-taking, which means that if risk appetite falls in stocks, it will also fall in Bitcoin, thus triggering an unwinding of positions. On the other hand, Ethereum is less affected by sentiment and is more of a pure sentiment play (which is why it has been rallying as Bitcoin falls).

What matters, however, is that Coinbase Global Inc. NASDAQ: COIN is in the middle of this rotation, ready to profit from it all.

The Bull Case for Coinbase Stock

Returning to business models, Coinbase is a cryptocurrency exchange in the financial sector that enables retail traders to enter the world of cryptocurrencies easily. This also makes the traffic center for transactions an essential feature now that rotations are taking place between Bitcoin and Ethereum, as transaction fees accumulate.

Each spread or commission is charged per trade. Each new account opened at Coinbase during this new cryptocurrency trading wave means higher potential revenue for the company, which, with a market capitalization of $79.8 billion, is large enough to operate efficiently and convert that revenue into earnings per share (EPS) growth.

That should mean good news for investors, but that’s not all. The stock trades at 70% of its 52-week high, indicating room to rise if the underlying fundamentals justify further growth. With this in mind, investors must find the catalyst to take the company forward.

That catalyst is staring everyone in the face: thousands of transactions exiting Bitcoin and entering Ethereum, the trading activity that an exchange like Coinbase lives for. The euphoria brewing in all trading accounts will reel in further interest in the platform, allowing additional monetization.

However, a story without numbers to back it up is just a fairytale. It’s time for investors to quantify this current environment and justify their shooting of higher prices in the coming months for Coinbase stock.

What Markets Expect Out of Coinbase

The MarketBeat consensus for EPS is set for $2.18 per share in the second quarter of 2026, which means very little. But, when compared to today’s reported 12 cents in earnings, it represents a massive jump in EPS growth, enough to entertain the thought that this stock could, in fact, head into a higher level.

How high? That’s a question for another powerful fundamental metric, rooted in valuation multiples. This time, the price-to-earnings-growth (PEG) ratio comes into play. This gauge measures how cheap (or expensive) a stock is today relative to where its future EPS could go.

Any reading below 1.0x indicates the stock is undervalued relative to its future EPS, necessitating a price adjustment to reflect this growth. Crunching the numbers, investors will note a 0.5x PEG for Coinbase stock, indicating that 50% of the company’s future earnings growth has not yet been priced in.

Now the dots start to connect: 70% of 52-week highs, a 0.5x PEG, and massive trading volume is happening between Bitcoin and Ethereum. This is the ideal cocktail to mark a major rally in Coinbase—a rally on the rocks, quite fitting given how sweet it appears.

Some won’t be able to handle this tall order, as investors can note the 22% decline in Coinbase’s short interest over the past month alone. This is a clear sign of bearish capitulation, as any short seller with a good head on their shoulders realizes that the risk-to-reward ratio simply doesn’t favor them right now.

A matter of time and patience, but those who miss out on Coinbase’s fundamental setup could soon regret not paying attention to what’s happening in the world of cryptocurrency.