Stocks of Cryptocurrency Exchange Coinbase (COIN) registered with NASDAQ are rapidly approaching a 10x research led by Markus Thielen, Friday. Thielen recommends pair trading, consisting of short coin positions and simultaneous long positions in Bitcoin
In a memo sent to clients, Thielen explained that Coinbase’s foundations, primarily trading volume, are not in line with stock price gatherings approaching the overvaluation threshold, a classic set-up of “tactical reversal.”
“Coinbase has not completely violated the +30% overestimation threshold, but it is fast approaching, and despite one of the few high-quality listed crypto theaters, the current premium suggests the risk of a lack of progress,” Thielen elaborated. “Traders looking to take advantage of this dislocation may consider going to long bitcoins when they are shortening Coinbase, or selling Coincalls and buying BTC calls to express the same view at defined risk.”
Basic cutting
According to the 10x linear regression model, 75% of Coinbase’s stock price action is explained by the price and trading volume of Bitcoin. In other words, only 25% of Coin’s price action is derived from other factors, such as the Circle IPO or the potential impact of US crypto and macro development.
Quantitatively, Coin’s prices tend to rise $20 for every $10,000 move in BTC and $24 for every $100 billion increase in trading volume.
Recent price actions suggest that rally is overly expanded compared to Bitcoin prices and trading volumes. Coinbase stocks have skyrocketed 84% over the past two months, while Bitcoin has risen just 14%.
“This premium appears to be cutting off from the underlying crypto trading volume, which is hovering about $100 billion,” Tieren said. “This rare deviation suggests that Coinbase’s rating has been expanded and vulnerable to averaging return.”
Other factors — June 3rd and June 17th’s “genius” Stablecoin Bill and other factors in the purchase frenzy from Korean investors seem to be priced.
“As this momentum cools, Coinbase’s share is also likely to be closer to the top of the locals as it becomes clear in the recent reversal of circles, Kakapai and Metaplanet,” Tieren said.
