Coinbase IPO Stock Price: COIN tests support at $310 as valuation worries surface

Update April 21: COIN shares are under the microscope as investors take a closer look at the valuation metric. COIN was worth more than the NYSE and Nasdaq shortly after launch and more notably was close to the lead bank involved in its listing, Goldman Sachs. GS has a market cap of $113 billion and COIN was approaching this shortly after listing as the shares roared ahead. Investors have started to focus on how sustainable the COIN business model is given it is highly dependant on stable commission rates. Commission rates on trading shares have been falling for decades as have trading fees for commodities, futures, and bonds. Crypto is a market in its infancy by comparison but if the trend spreads across, COIN will not be able to maintain current margin and commission levels. 

Update: COIN struggles for gains on Tuesday as the Bitcoin hangover continues. COIN shares are lower by nearly 1% early on in the session. Technically the chart still remains bearish with the DeMark sell signal still in place. COIN also broke support at $338.32, a Fibonacci retracement level.

Coinbase launched on Wednesday on the Nasdaq to much investor anticipation. The crypto sector has been one of the most revolutionary developments to financial markets this century as Bitcoin steadily inserts itself into the mainstream. Companies are increasingly making Bitcoin part of their future plans with Goldman Sachs, VISA, Tesla and others all getting on board.

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Coinbase (COIN) stock forecast

Coinbase has seen recent large purchases by Cathie Wood's ARK funds, but all that pales in insignificance as the Bitcoin effect ripples through crypto-related stocks.

Bitcoin tumbled from $59,000 to $52,000 this weekend as rumours swirled that US authorities were set to clamp down on cryptocurrency use in illicit transactions. Turkey also banned the use of Bitcoin last week. All of this is likely to see some pressure on COIN when it opens for trade on Monday. Losses in the pre-market remain relatively modest as Bitcoin has recovered to trade back to $57,000. 

On the technical level, we have some bearish signals with a DeMark '9' sell signal on the hourly chart in COIN. The premarket price for COIN is also just breaching the 23.6% Fibonacci retracement of the move from the high to low set on COIN's opening day. A break of this level of $338 brings the ultimate low as the next target of $310.22. 

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