From Hot IPO To Cold Wells Notice

Coinbase
COIN
(NYSE: COIN) began its existence on April 14th, 2021 as a hot initial public offering that cryptocurrency freaks could not stop talking about.

There was more than the usual amount of “this one’s going to the moon!” free and sometimes paid-for advice that typifies a certain type of IPO no matter what the era or the industry. The certainty of success seemed obvious to the many who participated.

When the stock was issued at a price of $250 — which got filled, by the way, by no investor — an immediate at-the-open rally took it up to $381 within minutes and then to a quick blast up to $424, a peak never to be seen again.

Coinbase since then is an example of almost relentless selling as the crypto world it represents entered what those enthusiastic about it took to calling “winter” — although some have noted that it’s lasted almost as much as an ice age, so far.

This week’s news that the Securities and Exchange Commission sent a Wells notice to Coinbase probably puts an end to any leftover hyper-enthusiasm for the stock. The government regulatory agency sends the notice to let a publicly traded company know that it intends to bring enforcement actions.

Are cryptos actually securities that must be registered with the SEC or not? That’s the basic underlying question and Coinbase lawyers will be working hard to prove the government should go away. The question of staking is in the legal mix.

Investors can’t be thrilled that the company is the recipient of such a “heads up, we’re coming after you” from the SEC and sellers unloaded again this week.

Here’s the daily price chart for Coinbase Global:

The Thursday and Friday selling that followed the Wells Notice did not take the stock all the way back down to the late December, 2022/early January lows. The price is still above both the 50-day and the 200-day moving averages but remains below the down trend line connecting the August, 2022 high and the mid-March, 2023 high.

It’s semi-impressive that Coinbase held up as well as it did after receiving the notice but a close below the most recent low of $50 would be a problem.

The weekly chart for Coinbase Global looks like this:

You can see how the stock never made it back to the peak of the IPO session and has generally followed the path of the well-known cryptocurrencies’ downward trend. It looked as if Coinbase would make it above the 50-week moving average but that is now called into question, a negative from a price chart analysis look.

For a different perspective, here’s the point-and-figure chart for Coinbase Global:

With this type of chart look you get a better sense of just how far the stock has fallen and just where the support levels exist ($51 and $32).

Not investment advice. For educational purposes only.