With the rise of prediction markets and asset tokenization, it seems like Coinbase (NASDAQ:COIN | COIN Price Prediction) has a front-row seat to two of the hottest emerging growth drivers that could power its shares to an impressive comeback in the new year, even as the crypto trade begins to exhibit a bit of weakness.
With Bitcoin (CRYPTO:BTC) prices retreating a bit to close off what’s been a rather uneventful year, it seems like it’s too early in the game to be reaching for the crypto-related stocks right here. Of course, time will tell where Bitcoin and the rest of the cryptos go into the new year. Perhaps the speculative activity and appetite for risk-taking will pick up again, especially once the tech and AI trade begins to recover and move on.
After a few strong sessions for the AI stocks, it seems like the latest wave of tech-driven volatility is less of an AI bubble bust and more of just a seasonal sector-based correction of sorts. In any case, Coinbase stock has been in a fragile spot in recent months, with shares of the popular cryptocurrency exchange platform now down more than 40% from their all-time highs. However, if risk-on tech (think AI) picks up again, one has to think that the crypto markets might be in a position to benefit.
The move into prediction markets is huge
Even if Bitcoin doesn’t have a fierce bounce, the company’s push into prediction markets, in particular, could be a needle-mover of sorts for the financial technology firm that’s really starting to expand its platform of offerings. Undoubtedly, the prediction markets are massive, and if Coinbase can grab a meaningful slice of the pie, it’s really tough to tell how much value could be added to the shares.
It’s not just about the potential growth as the prediction markets come to Coinbase; it’s also about how the new revenue stream could help smooth things out when the crypto market inevitably runs through those bear-market (crypto winter) periods. As you may know, falling crypto trading volumes can be a pain for the crypto exchange platforms.
As Coinbase expands, perhaps the firm will be in a better position to weather such inevitable winters. At the end of the day, election years and other events aren’t dependent on the state of the crypto markets. With the company recently inking an agreement to buy prediction markets startup The Clearing Company, it seems like Coinbase is wasting no time as it looks to seize what could be one of the biggest expansion opportunities for the firm in recent memory.
Coinbase is transforming into an “everything exchange.”
So, is it really time we think of Coinbase as more than just a crypto exchange and more like an exchange for just about anything?
Probably. The tokenization theme is another tailwind that could help power Coinbase to greater heights in the coming years. Whether we’re talking about art and collectables (which have been booming in recent years), real estate, or other tangible goods, the possibilities are endless. And it’s bound to attract the attention of retail investors looking for convenient alternative assets to place bets on.
Perhaps Coinbase will soon be viewed as a one-stop shop by investors looking to bet on crypto, stocks, options, predictions, or just about anything.
Of course, time will tell how many other fintech firms also jump aboard the predictions markets and tokenization bandwagons. Personally, I’m a fan of Coinbase’s execution and wouldn’t bet against the name while it’s still in a bit of a rut amid recent crypto market volatility.
At the time of this writing, shares of Coinbase look like a growth bargain at 21.4 times trailing price-to-earnings (P/E), especially considering the potential of prediction markets to jolt sales growth over the next three years.
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