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Coinbase stock price holding up despite arbitration ruling​​​

​​​Coinbase stock price holding up despite arbitration ruling

​While a recent ruling from the US Supreme Court caused the Coinbase stock price to wobble, it continues to recover from recent lows.

​Coinbase’s stock price is holding up well despite the recent legal news involving a Supreme Court ruling against the cryptocurrency exchange. After drifting lower from its March record high, the stock price appears to have stabilized and formed a low.

​Strong Q1 performance fuels optimism

​The largest US cryptocurrency exchange posted impressive first-quarter (Q1) revenue of $1.6 billion, a 72% increase quarter-on-quarter. Coinbase reported net income of $1.18 billion (or $4.40 per share), fuelled by a boost in transactions due to the wider crypto market’s upswing and a favourable change to crypto accounting rules.

​Consumer transaction revenue doubled from the previous quarter, reaching $935.2 million, with volume up over 93% to $56 billion. The institutional trading segment saw even greater increases, with revenue up 133% to $85.4 million and volume more than doubling to $256 billion. Bitcoin accounted for a third of both consumer and institutional transactions.

​Arbitration ruling has limited impact

​The US Supreme Court unanimously ruled against Coinbase in an arbitration case involving a dispute over conflicting arbitration clauses in two separate contracts. The case stemmed from a Dogecoin sweepstakes competition in 2021 and was not directly related to Coinbase’s core cryptocurrency business.

​The ruling affirmed that when parties are bound by two distinct contracts with contradictory arbitration provisions, courts, not arbitrators, must determine which agreement applies and whether the dispute should proceed to arbitration. Legal experts view the decision as having limited broader applicability, as it addresses a fairly narrow scenario unlikely to arise frequently.

​Anticipation for Major Crypto Regulatory Rulings

​While this case had little direct relevance to the digital assets sector, the cryptocurrency industry eagerly anticipates future Supreme Court decisions that could resolve ongoing legal battles between crypto firms and US regulators over jurisdictional issues. However, such cases may take years to reach the high court.

​Despite the narrow legal setback, Coinbase’s strong financial performance and the limited scope of the Supreme Court ruling have helped maintain investor confidence, as reflected in the stock’s resilience.

​LSEG Data & Analytics analyst Coinbase recommendations

​LSEG Data & Analytics data shows a consensus analyst rating of between ‘buy’ and ‘hold’ for Coinbase – 5 strong buy, 6 buy, 14 hold and 2 sell with a mean of estimates pointing to a long-term price target of $130.42, approximately 8% below current levels (as of 28 May 2024).

​Coinbase – technical view

​The Coinbase share price, up over 50% year-to-date, is about to test its late-April high at $239.00, a rise above which would confirm its May bottoming formation with the Mar peak at $283.48 then being back in sight. Further up beckons the minor psychological $300.00 mark.

​Coinbase Daily Chart

​This bullish view will be maintained while no unexpected bearish reversal take the Coinbase share price to below its current May low at $194.93.

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