Sticking to This Coinbase Price Target After Google, Ethereum Partner Update
Digital asset platform Coinbase shoots higher as growth drivers converge.
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Shares of Coinbase COIN roared higher to a 7% gain on Thursday. Shares of the San Francisco-based digital asset platform are seeing heavy buying thanks to a confluence of positive factors.
Let’s take a closer look at those factors, along with an analysis of the Coinbase chart.
Interest Rate Cuts
On Wednesday, the U.S. Federal Reserve announced a 25 basis point cut in the Fed funds rate.
More cuts are on the way. According to the CME’s Fedwatch Tool, there is currently an 80% chance that the Fed will cut its main interest rate by an additional 50 basis points before the end of this year.
Why are lower interest rates positive for Coinbase? As interest rates decline, some investors, in search of higher yields, could be attracted to alternative investments.
Yield farming provides one such alternative. Cryptocurrency owners deposit their digital holdings into a liquidity pool. In return for providing liquidity, the crypto holders receive a payout. Because yield farming is riskier than owning traditional investments, that payout tends to be relatively high.
As one of the largest digital asset platforms, Coinbase stands to benefit from this potential influx of yield-seeking investors.
Entry into Prediction Markets
A prediction market is a platform where participants buy and sell contracts. Unlike the futures market, in which investors buy and sell contracts for oil, gold and other commodities, prediction market contracts are based on the outcome of future events.
Platforms like Polymarket and PredictIt facilitate trading contracts based on diverse sets of circumstances. These include elections, international conflicts, sporting events, and celebrity marriages.
While critics suggest prediction markets blur the line between trading and gambling, it’s a rapidly growing industry. Coinbase is anticipated to offer prediction market trading by late 2025 or early 2026.
Teaming Up With Google
Earlier this week, Google announced it would partner with Coinbase and the Ethereum Foundation to create a payment system platform. This platform is designed to streamline the process of sending and receiving money. Payment options include credit and debit cards, along with stablecoins.
Stablecoins are a form of digital money. The use of stablecoins is expected to grow significantly, from the current level of $30 billion in transactions daily. By combining stablecoins with more traditional payment systems on one platform, Google could be a significant driver in their mainstream adaptation.
Coinbase Hits a Two-Month High
On Thursday, Coinbase closed at its highest level in over two months. The stock had formed a bearish head and shoulders pattern (L-H-R), but the neckline of that pattern (black dotted line) held firm, and that pattern is now negated.
On Thursday, Coinbase managed to close above its 50-day moving average (blue) for the first time since July 31. Our target price for Coinbase remains $429, as indicated here.
At the time of publication, Ponsi was long COIN.
