Why Shorting COIN & Going Long BTC Is the Smart Play as Coinbase Nears Overvaluation – 10x Research
Coinbase’s rally hits a wall—time to flip the script.
With COIN’s valuation stretching into questionable territory, 10x Research spots a prime opportunity: bet against the exchange, back the asset. Here’s why.
The trade setup: When the hype machine overshoots.
Coinbase shares have soared alongside crypto’s resurgence, but analysts warn the disconnect between price and fundamentals is growing. Meanwhile, Bitcoin—the OG crypto—keeps grinding higher with institutional adoption as the tide.
The playbook: Short the middleman, long the masterpiece.
Exchanges ride crypto’s waves but crash harder when sentiment flips. Bitcoin? It’s survived every cycle. This isn’t finance—it’s a casino where the house (eventually) always loses.
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.
