Why Shorting COIN & Going Long BTC Is the Smart Trade as Coinbase Nears Overvaluation – 10x Research
Wall Street's latest crypto darling might be running on fumes. Coinbase's parabolic rally has analysts whispering about stretched valuations—while Bitcoin quietly sets up for its next act.
The trade? Bet against the middleman, back the asset.
When exchanges outperform the assets they trade, someone's counting unhatched chickens. 10x Research spots the divergence: COIN's 90-day tear now trades at 12x forward revenue—triple crypto winter multiples—while BTC's network fundamentals scream accumulation phase.
Pro tip: The house always wins... until traders remember crypto's first rule—not your keys, not your coins. This time? The house is publicly traded.
Fundamental disconnect
According to 10x's linear regression model, 75% of Coinbase's stock price action is explained by bitcoin's price and trading volumes. That means just 25% of COIN's price action is led by other factors, such as the potential impact of Circle's IPO or U.S. crypto and macro developments.
In quantitative terms, it suggests that COIN's price tends to rise by $20 for every $10,000 MOVE in BTC and by $24 for every $100 billion increase in trading volume.
The recent price action suggests the rally is overextended relative to bitcoin's price and trading volumes. Shares in Coinbase have surged 84% over the past two months, while bitcoin has risen by just 14%.
"Not only is this premium stretched relative to bitcoin’s current price, but it also appears disconnected from underlying crypto trading volumes, which are hovering around $108 billion," said Thielen. "This rare deviation suggests Coinbase’s valuation is extended and vulnerable to mean reversion."
The report said that other factors – Circle’s IPO on June 3, the June 17 “GENIUS” stablecoin bill and the buying frenzy from Korean investors – seem to have been priced in.
"As this momentum cools, evident in the recent reversals of Circle, KakaoPay, and Metaplanet, there is growing risk that Coinbase shares could also be nearing a local top," Thielen said.
