Coinbase stock price is rising: Here’s why this is a bull trap

Coinbase stock rose by over 8% on Tuesday as technology companies rebounded amid signs that President Donald Trump was considering ending the war. COIN rose to $177.63, up slightly from this week's low of $160. Still, technicals suggest that the stock will likely remain under pressure in the near term.

Coinbase stock rose amid risk-on sentiment 

The COIN share price rose on Tuesday as American shares surged amid a risk-on sentiment. This rebound happened after Donald Trump telegraphed that he wanted to wind down his war against Iran. 

As a result, top indices like the S&P 500 and Nasdaq 100 jumped by over 2% in their best day in over a month. Crypto prices also rebounded, with Bitcoin rising to $68,500 from $66,000 a day earlier. The market capitalization of all coins rose to over $2.37 trillion.

Coinbase stock price does well when Bitcoin and other altcoins are rising because this often leads to more trading activity, which in turn leads to higher transaction revenue. The company also holds 15,330 BTC coins and 151,275 ETH in its balance sheet.

Still, there is a risk that the company is not out of the woods yet as Bitcoin and Ethereum have formed bearish chart patterns pointing to an eventual bearish breakdown in the foreseeable future. 

As the chart below shows, Bitcoin has formed the second bearish flag pattern since October last year. This pattern is characterized by a vertical line and some consolidation and often leads to more downside. If this happens, the coin may drop to $50,000 in the near term.

BTC price chart | Source: TradingView 

Additionally, the weak performance of the crypto market in the first quarter means that the company’s revenue and earnings will be weaker than expected despite the recent product launches.

The average estimate is that the company’s revenue will come in at $1.55 billion, down by 22.4% from the same period last year.  The earnings-per-share (EPS) is expected to drop to 50 cents.

Analysts also expect that the annual revenue will drop by 1.1% to $7.1 billion this year. This retreat will happen because of the ongoing crypto market weakness and the fact that its newly launched businesses will likely take longer to gain traction.

Coinbase recently launched its prediction marketplace, joining other companies like Robinhood that have launched similar solutions. 

It also launched a stock market trading platform that enables people to invest in tokenized stocks and ETFs. Most recently, the company partnered with Better Home & Finance to offer crypto-backed mortgages.

Coinbase share price technical analysis points to more weakness

COIN stock chart | Source: TradingView

Technical analysis can help us predict whether a stock will rise or fall over time. In this case, the weekly chart suggests that the stock may continue falling in the foreseeable future.

It has remained in a bear market after falling from the all-time high of $443 to the current $174. A closer look shows that it is now hovering near the important support level that connects the lowest swings in September 2024, April last year, and February this year.

Its attempts to rebound after hitting this support level found substantial resistance at $212.50.

The stock has remained below the Ichimoku cloud and the Supertrend indicators, while the Relative Strength Index (RSI) has continued to retreat.

Therefore, more downside will be confirmed if the stock drops below the ascending trendline. If this happens, the next key target level to watch will be the psychological level at $100