Coinbase is one of the largest and most popular cryptocurrency exchange platforms in Australia and worldwide that supports 50 digital assets, including market-leading Bitcoin, Ethereum, and other altcoins. Coinbase makes most of its income from the trading fees it charges when users buy and sell cryptocurrency, and with the hype around Bitcoin and the crypto market in general, this exchange has grown to become one of the most interesting companies out there in the market.
So, after the minor drop in Coinbase's share price and the mini-crash of the crypto market that started around May, is it the right time to buy Coinbase stock? Will the company recover fast, and how cryptocurrency prices are correlated with Coinbase's share price? What are the reasons to hold Coinbase stock? This guide will help you find the answers to all these questions and guide on how to buy Coinbase shares in Australia.
Where to Buy Coinbase Shares in Australia
When a company goes public, it is listed on a stock exchange and gets a ticker name. Stock exchanges, obviously, do not own the shares; they simply connect buyers and sellers and manage this process. In our case, Coinbase is listed on the NASDAQ stock exchange under the ticker symbol COIN, which means you need to find an online broker that supports US shares and allows you to buy Coinbase shares.
There are several top-notch brokerage platforms in Australia today, so you need to select the most appropriate one for you. It would be best to consider certain things while choosing an online broker, but first and foremost, the most important factor is the fees you need to pay when you go in and out of a position as well as account management fees. Your broker does not offer these services for free, so it charges various trading and/or non-trading fees. Hence, it would be best to choose a broker with more competitive prices, like eToro, which does not charge any commission fees for stocks and ETFs.
eToro - Buy Coinbase Shares in Australia Commission-Free
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eToro is certainly one of the most popular social brokers worldwide, and in Australia. Founded in 2006, this company already has 17 million registered users from almost 100 countries, which makes it the largest social trading network in the world. The platform supports thousands of assets, including stocks, commodities, indices, ETFs, digital assets, forex. Plus, it is possible to buy stocks not only outright but also using Contracts for differences (CFDs). This form of derivative trading will enable you to take advantage of a 5:1 leverage ratio, which means that you can get a share of Coinbase paying 20% of the stock.
With its good functionality and simple interface, eToro is especially famous among beginner investors who mostly want to buy an asset and hold it, or get access to a fun trading platform. Moreover, the platform supports buying fractional shares, which means that you can get less than one share of a company.
One major advantage that helps eToro stand out among other brokers is its super social trading environment. Having a personal account on eToro, you can interact with millions of different traders or copy trades of experts through such tools as CopyPortfolios or CopyTrades.
When it comes to buying stocks in Australia, you can buy shares listed on US exchanges with zero commission, meaning you do not need to pay any fixed trading fees. Instead, eToro charges buy and sell spreads and non-trading fees. The latter includes a $10/month inactivity fee after one year of inactivity and conversion/withdrawal fees only for non-USD contracts. eToro also does not charge any management fees - social trading tools are available for free, and there are no monthly account fees.
Finally, eToro provides a safe trading environment as the platform is heavily regulated by ASIC in Australia, by the CySEC authority in the EU, by the FCA in the UK, and by FinCEN in the United States. To start trading with eToro, you need to deposit a $200 (around 270 AUS) minimum requirement. You can fund your account through credit and debit cards, bank account, or e-wallets (Skrill, Paypal, Neteller).
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Should You Buy Coinbase Shares Right Now?
Founded in 2012 by Brian Armstrong, Coinbase Global is a crypto exchange giant company that has 56 million registered users as of 2021. Initially, the platform supported only Bitcoin trading, but later it enlarged its selection of altcoins, and now, users can trade almost 50 cryptocurrencies on Coinbase's platform. The company stands out with its extremely high liquidity and the smooth and clear user interface that is somewhat not very common in the cryptocurrency market.
Coinbase predominantly profits from the cryptocurrency trading fees, withdrawal fees, and some storage services it offers. It means that its revenue is primarily dependent on the prices of digital currencies. When Coinbase went public in April 2021, it was the period when Bitcoin doubled in its value, and other crypto-assets were following its path. It positively affected Coinbase's revenue, and the company significantly increased its profits for the first quarter of 2021 compared to that of the last year.
However, as we already know, there are lots of ups and downs in the crypto market. ups and downs in the crypto market. In May, Tesla CEO Elon Musk announced that the company would stop accepting Bitcoin for transactions and mentioned that the primary reason for this is its harmful impact on the environment. During the same period, the Chinese bank also expanded its restrictions on cryptocurrencies. These factors resulted in panic in the crypto market, with lots of people selling their cryptocurrencies. Consequently, Bitcoin significantly lost its value, dropping to below $30,000 from $60,000.
As a result, Coinbase earnings also significantly suffered from this as the number of monthly transactions of users decreased. Coinbase stock dropped in value, and now it's trading below its IPO price and nearly 50% below the all-time level. But the factors mentioned above show that it is strongly correlated with the price of Bitcoin and other crypto-assets. So, when cryptocurrencies go mainstream again, Coinbase's share price will immediately recover its value as the number of transactions on the platform will rise again. Further, if regulators around the world will ultimately approve cryptocurrencies and crypto exchange, then Coinbase is expected to become a huge company.
So, when we take all the factors into account - there's clearly a risk in buying shares of Coinbase, especially when the price of one share is fairly expensive. At the same time, there's a huge opportunity to get exposure to the crypto market and invest in one of the largest crypto-related companies in the world.
Coinbase share price history
When the company went public in April, Coinbase's IPO price was $250. Then, COIN prices quickly jumped high in April, hitting above $400 on April 14. The trend, however, did not last too long, and following the recent crash in the cryptocurrency market, Coinbase stock dropped in value.
Coinbase hit an all-time low on May 19, when it was traded at $208. After that, the stock tried to recover several times, but it has never traded above $300 since then. At the time of writing, Coinbase is trading at $247, which is slightly below its IPO price.
Coinbase share price prediction
Generally, analysts' market predictions for Coinbase stock are mainly optimistic. The results of polls conducted among prediction sites show that most of them recommend buying Coinbase stocks. With that in mind, let's take a look at some of the price predictions.
A CNN Money poll conducted among 17 analysts for a 12-month price forecast indicates that Coinbase stock has a median target of $335. The highest prediction is $650 while the lowest is $225.According to 12 of them, Coinbase stock is a buy right now, and only one of them recommends selling Coinbase shares.
Coinbase price predictions, source: CNN Money
Another poll on Wallstreetzen conducted among 14 analysts shows a $366 median price for a 12-month price forecast. Eight of the analysts strongly recommend buying Coinbase stocks, while only one of them recommends selling.
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3 Reasons to Buying Coinbase Stock
If you still cannot decide whether you want to buy Coinbase shares or not, here are three reasons on the likes of Coinbase that can help you make up your mind.
Digital Currencies Go Mainstream
One of the reasons why you should buy Coinbase stock is the role of crypto assets in our life. Cryptocurrencies are becoming more and more mainstream, and as the company is at the forefront of this industry, it will significantly benefit from this. Coinbase is a leading crypto exchange platform in the US and worldwide with a well-designed platform to meet the requirements of all types of users. If it attracts more users, the amount of MTUs will grow, which will positively reflect Coinbase's profit, and its share value will increase.
Strong Q1 Report of 2021
Another notable reason to buy Coinbase stock right now is that the company proved to be very profitable compared to last year. In May, Coinbase published a document about its earnings for the first quarter of 2021. The report indicated that the company's profit is pretty promising compared to the same quarter of 2020.
The report introduces charts comparing four quarters' results in the previous year and those of the first quarter of 2021. It becomes obvious that the company ended Q1 with 56 million registered users, which means that the number of users registered during Q1 is more than the amount of all four quarters in 2020 together. The amount of retail MTUs increased to 6,1 million while it ended Q4 of 2020 with 2,8 million registered retail users.
Coming to the profits of the company, the numbers are even more astonishing. According to the charts, the company brought $771 million in net income in the first three months of 2021, which was $32 million for the same period of the last year. The revenue in Q1 jumped to $1,8 trillion from the $191 million of the Q1 of 2020.
Coinbase is a Safe and Popular Crypto Platform
Coinbase is one of the safest crypto exchange platforms, which is a crucial factor in attracting more users. Coinbase has received an e-money license from the FCA and complies with all applicable laws and regulations in each jurisdiction in which it operates. Further, Coinbase claims that its platform has never been hacked.
Does Coinbase Pay Dividends?
Companies that pay dividends distribute a small amount of money from their earnings to their shareholders. Dividends can be paid quarterly, twice a year, or annually, depending on the company or the year. Coinbase, however, is not among dividend-paying companies. It has never paid dividends to its stockholders and does not plan to do it in the future.
What Are the Risks of Buying Coinbase Shares
Along with the reasons why you should buy Coinbase, it's crucial also to know the risks of investing in this company. Here are some of the challenges the company is currently facing and how Coinbase tries to struggle against them.
Fees and Competition - Those who have ever used Coinbase and some other crypto exchanges may already know that the platform charges relatively higher fees compared to other crypto exchange platforms. The amount of crypto exchange platforms is growing rapidly, meaning that lots of different exchanges appear with lower fees and perhaps better services. Still, Coinbase is known as a well-established and reputable platform among investors, and it attracts users with its safe trading and better customer support.
Plus, Coinbase launched its Coinbase Pro account with lower fees, though it's not designed as well as the Standard version.
Competition in the crypto market - New cryptos emerge daily. Another match, but this time among the cryptocurrencies, can also negatively impact the amount of MTUs on Coinbase. Coinbase mentions this problem in its Q1 report reassuring that it keeps track of the problem of the expansion of the cryptocurrency market.
More and more digital assets emerge nowadays, while the problem with this is that if people buy new cryptos trading volume of the other cryptos decreases. So, if these new cryptos are not listed on Coinbase, users will try to buy them on other platforms, negatively impacting the trading volume of those cryptos listed on Coinbase. Still, the company welcomes these challenges as indicators that the market is growing rapidly. So, it will try to address these problems to increase and improve its platforms.
Highly correlated to Bitcoin price. Here is another significant problem to take into account when you invest in Coinbase stock. Bear and Bull markets are two opposite market conditions in trading. During the Bear market, prices of assets see a prolonged decline, while they are on the rapid rise during the Bull market. As Coinbase is a trading platform, its profit is also hugely correlated with market conditions.
Coinbase profit will increase during the Bull market but will suffer during the Bear market. The evidence we saw when the Bitcoin prices crashed with other altcoins following it. The whole cryptocurrency market is in a crisis right now, affecting the number of monthly users on Coinbase. For comparison, Coinbase was valued at $85 billion when Bitcoin doubled in its value, and now it stands at $53 billion when the leading cryptocurrency prices dropped significantly.
How to Buy Coinbase Shares - A Full Step by Step Guide with eToro
Now, when you have got all the necessary information about the Coinbase stock and want to buy its shares, you need to open an account on a brokerage platform that is regulated and authorized in Australia. To help you in the process, in this part of the article, we will show you where and how to buy Coinbase shares in Australia.
Open a Trading Account
Firstly, you need to visit eToro’s website and register for an online account. To do this, just click on the “Join now” button on the main page and fill in the necessary information. Now, you have an account, but it’s not complete yet. To finish the registration process, simply click on “Complete Profile” and provide the required information, including name, surname, date of birth, and other personal data. eToro will also ask some questions about your trading experience and plans, after which you must verify your profile with a phone number.
Step 1. Register for an online account on eToro
Verify Your Account
As eToro is regulated by ASIC in Australia, all its users must go through the Know Your Customer process. In this phase, you are required to verify your identity (with a copy of your passport or driver's license) and address (any utility bill or bank document is acceptable).
By the time eToro verifies your account, you can use your time exploring the website with a demo account and get familiar with its trading tools. eToro also has lots of educational content, so you can explore it to improve your knowledge about trading.
When eToro verifies your account, there is only one small step left to start buying stocks. The broker requires a minimum deposit of $200 to allow you to trade, Plus, you need to have some additional money to buy stocks. You can fund your account with a credit/debit card, use a bank transfer method or e-wallets.
Step 2. Deposit funds
Buy Coinbase Shares
Finally, you can buy Coinbase shares. Search for COIN in the search bar and click on the first result. You will be provided with Coinbase's instrumental page, where you will have access to various stats and charts about Coinbase.
Step 3. Start trading Coinbase
When you are ready to buy Coinbase shares, click on the "Trade" button and fill in the number of shares you want to buy. If the market is open, you will find a "Buy" button and click on it. If you are trading during the non-trading hours, simply click on "Place order," and your broker will take care that your buy is completed when the market opens.
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How to Short Sell Coinbase Shares in Australia
Buying and holding shares of Coinbase is one type of strategy, however, if you think that Coinbase prices will continue dropping for a particular period, you can make a profit from this scenario. For those who are not familiar with this strategy - when you short sell the company's stocks, you basically borrow shares from your broker and immediately sell them in the market. Later, when the prices go down, you buy a similar amount of stocks and return them to your broker.
Notably, if you want to short sell Coinbase shares, you need to find a brokerage firm that gives you this option. On eToro, for example, short selling is available through CFDs. It's a rapid and easy process: you just need to click on the "Sell" button next to the "Buy" button. A window will appear where you can set your short-selling position.
In conclusion, Coinbase is the leading cryptocurrency exchange platform in the US and one of the most popular crypto platforms in the world that has gone public recently. The company was valued at $85 billion in its IPO, and the stock price has seen significant growth after that. However, the prices dropped in May, and now Coinbase stock is traded below its IPO price, which according to some analysts, the drop in the value of Coinbase shares is an opportunity for long-term investors.
This drop in value is mainly associated with the recent mini-crisis in the cryptocurrency market. As Coinbase makes its earnings from the trading fees, it's strongly affected by the cryptocurrency prices at the moment. Following this correlation, Coinbase will increase in its value when the digital assets recover their value.
To buy Coinbase shares in Australia, you need to find an online broker with competitive fees and register for an online account. eToro allows you to buy shares without paying any additional commission. To get familiar with the process of buying Coinbase stock, simply return to our guide, and you will get all the necessary information about it.
eToro - Buy Coinbase Shares with 0% Commission
eToro have proven themselves trustworthy within the stock market over many years – we recommend you try them out.
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