If investors were wary about the state of crypto heading into 2022, they needn’t worry; it looks like the asset class is primed for some bullish momentum as we get into the new year. Indeed, the appetite for crypto buying seems nowhere near satiated, even as some worry lingers about the immediate future of the asset class. Coinbase (NASDAQ:COIN) is one company who is set to greatly benefit from this massive buying. As such, Coinbase stock is a topic of interest.
COIN stock is one of the first which investors turn to in order to gain indirect exposure to cryptocurrency. As the only publicly traded crypto exchange in the United States, investors can buy the stock in order to invest in a company that underpins crypto trading. This makes it an appealing offering to many.
As an exchange, Coinbase measures its success in the flow of currency on its platform. The more active users, and the more these users buy and sell, the more Coinbase grows as a company. This is the way many people evaluate the health of an exchange. However, there is a fear among some that if an exchange’s assets see price volatility, it can spell disaster. Of course, this feeling is rooted in the fact that all investors have a threshold for risk; as risk increases, there will be less willingness to actually use an exchange.
Coinbase Stock Gets a Boost From Bitcoin Outflow
While there are plenty of investors who hold the latter belief, recent exchange activity suggests that this theory isn’t the case at all. In fact, the volatility the market is seeing presently actually stands to benefit Coinbase stock.
Indeed, Bitcoin (CCC:BTC-USD) has been seeing a lot of price volatility. In the last week of 2021, the coin saw a steep drop from $51,800 to under $46,000. More bearish folks believe this is detrimental to Coinbase; with more risk present in crypto investments, they believe that Coinbase activity will decline.
But, it looks like this belief is far from the truth. In fact, outflow from the Coinbase exchange is booming at unprecedented levels. This falls more in line with crypto bulls’ beliefs about volatility — the idea that activity will increase with price tumbles as investors race to buy the dip. The last day of 2021 saw a massive 10,000 Bitcoin leave the Coinbase exchange. Investors are not losing interest, they’re adding as much crypto to their wallets as they possibly can. This comes alongside a predicted surge in institutional Bitcoin buying.
If this trend continues, Coinbase stock is only going to continue building gains throughout 2022, whether or not crypto is gaining. As the market gets into the afternoon, COIN shares are flat.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.