Different market sectors move at different times. But when a sector does take off, it will often need to pause for a while before moving higher. This consolidation trend is normal, and in some sectors can last for years, in others, for weeks.
The cryptocurrency market has been consolidating for a few months now following bitcoin’s halving in April. That may have shaken out momentum traders hoping for a quick ride to new all-time highs.
Today, it’s creating an opportunity across the crypto space. And with discussion about more crypto ETFs, the big winner could be Coinbase (COIN).
The cryptocurrency brokerage serves as custodian for most of the bitcoin ETFs. An expansion into Ethereum ETFs would allow Coinbase to generate more fees.
And if crypto prices trend higher, trading volume stands to jump as well, which could further boost Coinbase’s revenues in the quarters ahead.
Action to take: Coinbase shares are about 20% off their 52-week highs. After this consolidation, shares look ready to trend higher in the months ahead. That could potentially offer investors mid-double-digit returns by year-end.
For traders, such an uptrend bodes well for today’s call buyers. The October $280 calls, last trading for about $19.00, could see mid-double-digit returns or better on a rally over the coming months.
Disclosure: The author of this article has a position in the company mentioned here, and may further trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.