The IPO of Coinbase (NASDAQ:COIN) last week sent bitcoin prices higher, fueling higher demand for Coinbase stock. The circular positive feedback endangers investors who have FOMO – fear of missing out.
Coinbase is a secure platform where users may store, buy, and sell cryptocurrency. Because it is not like holding bitcoin, dogecoin, or Ethereum directly, it should not enjoy the same run-up.
Coinbase has very poor customer service. This could hurt the customer registration growth in the near term. The company will have to hire more staff and increase spending on operations to support its growth. Failing to do so will slow its growth rates and let competitors take its market share.
As a new IPO, COIN stock will have all the risks of any other newly-issued stock. Speculators buying the stock will quickly dump it if the stock falls by too much. Investors may just as easily buy Marathon Digital (NASDAQ:MARA), Mogo Finance (TSX:MOGO), or Riot Blockchain (NASDAQ:RIOT) for getting exposure to the sector.
COIN stock could move wildly in either direction. Its unpredictability is suitable for day traders but not for regular investors.
Avoid Coinbase at this time. Consider holding small positions in Voyager Digital (CNE:VYGVF), RIOT stock, or Marathon Digital.
