Death Cross Looms: What's Next for Coinbase Investors?

TLDR:

Table of Contents

Coinbase shares have dropped 20% in March, completing their worst quarter since the FTX collapse
The stock is trading within a descending broadening formation with technical indicators pointing to further weakness
Key support levels to watch are at $146 and $115, while resistance stands at $206 and $264
The decline correlates with reduced trading volumes and Bitcoin’s price retracement since December
Trump’s trade war and economic concerns have contributed to investors fleeing from risky assets, including crypto-related stocks

Coinbase shares have fallen for four consecutive sessions at the end of March. The stock wrapped up a volatile month with a 20% drop in value. This decline has been part of a larger pattern since December.

The technical chart shows Coinbase stock is retreating within a descending broadening formation. This pattern often signals continued weakness. Adding to the bearish sentiment, the 50-day moving average is about to cross below the 200-day moving average.

This crossover creates what traders call a “death cross.” This technical pattern typically signals lower prices ahead. The relative strength index (RSI) is also approaching oversold territory, indicating weakening price momentum.

Coinbase’s struggles match broader market concerns. The stock has lost approximately half its value since hitting a three-year high in early December. This decline correlates closely with Bitcoin’s price retracement during the same period.

Trading volumes on the exchange have fallen significantly. This reduction raises concerns about lower transaction fees affecting the company’s revenue potential. The stock closed Monday’s session at $172.23, down 1% for the day.

Investor sentiment has been dampened by macroeconomic factors. President Trump’s escalating global trade war has created economic uncertainty. These trade tensions have sparked fears about potential slowed economic growth and renewed inflation.

Worst Quarter Since FTX Collapse

The current quarter has been particularly rough for Coinbase. The stock is down more than 30% quarter-to-date. This performance represents the worst quarterly showing since the FTX exchange collapsed in late 2022.

Coinbase isn’t suffering alone. Nearly all major crypto-linked stocks have plunged alongside it. Companies like Galaxy Digital Holdings, Riot Platforms, and Core Scientific have seen similar declines.

The cryptocurrency markets themselves haven’t fared much better. Bitcoin has tumbled more than 10% during the quarter. Ethereum has performed even worse, losing more than 45% of its value in the same period.

Investors are closely monitoring several key support levels on the Coinbase chart. A breakdown below the lower trendline of the descending broadening formation could push the stock toward $146.

This level aligns with last year’s September swing low. It also matches a series of comparable trading levels from December 2023 to February 2024. Many investors may look for buying opportunities near this price point.

Should selling pressure continue below $146, the next major support sits at $115. This area represents a multi-month horizontal line connecting the July 2023 peak and February 2024 trough.

Resistance Levels Limiting Upside

Any upward movement in Coinbase stock faces challenges. Initial resistance appears around $206. This level corresponds to the March countertrend peak.

This resistance aligns with price action dating back to February 2023. A rally beyond this area would bring the $264 level into play. This region sits just above the upper trendline of the descending broadening formation.

The $264 level matches a range of peaks and troughs formed between April last year and February this year. Breaking through these resistance levels would require significant buying pressure.

While cryptocurrencies struggle, traditional safe havens tell a different story. Gold has emerged as a primary hedge against risk in the current market. The precious metal has seen its best quarterly return since 1986.

Gold has powered to new highs while Bitcoin falls. Despite some viewing Bitcoin as “digital gold,” the two assets have performed very differently during recent market uncertainty. Investors have shown limited conviction that Treasury bonds could serve as effective hedges.

This market divide highlights the still-speculative nature of crypto assets. When economic warning signs appear, crypto-linked stocks tend to sell off faster than other investments due to their higher volatility.

The current state of crypto markets contrasts sharply with the beginning of the year. Optimism ran high after Trump’s election, with Bitcoin hitting a record above $109,000 on Inauguration Day in January.

However, Trump’s actions on crypto have failed to meet the industry’s highest expectations. Bitcoin fell earlier this month after the president created a strategic reserve of the token but didn’t authorize using taxpayer money to expand it.

Despite these disappointments, Bitcoin still trades around $82,000. This level remains well above its pre-election price. The picture for crypto-related stocks is less positive, with most giving up their post-election gains.

Analyst Perspectives

Industry analysts offer some context for the sell-off. Oppenheimer analyst Owen Lau suggests the decline isn’t driven by fundamental reasons. Instead, he points to macro factors like tariffs and recession worries.

Lau notes that crypto-linked stocks carry additional risks compared to Bitcoin itself. Investing in companies adds the threat of bankruptcy. This makes these stocks prone to faster sell-offs when economic warning signs appear.

For Coinbase specifically, the exchange derives revenue from both Bitcoin and alternative tokens. Since altcoins like Ethereum have declined even more rapidly than Bitcoin, this compounds the negative impact on Coinbase’s prospects.

Connor Loewen, a cryptocurrency analyst at 3iQ, suggests the market may need new catalysts. The excitement from a few months ago represented an unusual peak of investor interest in the industry.

Despite market challenges, the crypto industry continues growing in influence. Its power in Washington is increasing. The sector is also moving closer to integration with traditional finance.

However, this progress hasn’t translated into a market rebound yet. Investors will need to watch both technical indicators and broader economic trends to gauge future price direction for Coinbase stock.

Stay Ahead of the Market with Benzinga Pro!

Want to trade like a pro? Benzinga Pro gives you the edge you need in today's fast-paced markets. Get real-time news, exclusive insights, and powerful tools trusted by professional traders: