Bitcoin’s price has experienced a 154% increase YTD. A key narrative driving this rally is the nearing Bitcoin halving that is estimated to happen in early 2024. Historically, Bitcoin’s price has always skyrocketed after the halving process which attracts investors to invest in Bitcoin. Bitcoin ETFs make it possible to gain exposure to Bitcoin’s price movement without having to trade on a crypto exchange or deal with the risks and complexities of directly owning digital assets. 

The SEC most definitely is not a fan of the Bitcoin ETFs. Multiple applications for Bitcoin ETFs have either been rejected or postponed without any certainty. Industry giants like BlackRock, Fidelity, and GrayScale are just a few turned down by the SEC. However, this might come to an end. 

After a series of delays, the nearest final deadline for a Bitcoin ETF is January 10 2024, which is the ARK 21Shares Bitcoin ETF. The significance of the January 2024 deadline is profound. With over ten Bitcoin ETF applications submitted, the SEC’s decision will have far-reaching implications. A company worth mentioning, that will experience significant impact from the ruling is Coinbase (COIN).  

Out of the 13 applications for Bitcoin ETF, 10 of them have Coinbase as their custodian. The custodian is a key infrastructure for Bitcoin ETFs, as they are safekeeping the assets owned by the ETFs. Coinbase dominates this key role and showcases a very positive potential. 

Technical Analysis

Charts and data Provided by TradingView

From the weekly chart of COIN, we can see an opportunity from an upward breakout of a cup and handle pattern shown by the green curves. The resistance level is represented by the grey box and has been touched twice by the price movement, indicating a strong resistance. Following the breakout, a long bullish candle was formed displaying a strong buy force. 

Charts and data Provided by TradingView

If we zoom in to the daily chart, we can see a strong upward trend. The price movement keeps moving above its EMA* 10 & EMA 25 shown by the yellow and green lines respectively. The EMA 10 also acts as a strong support with multiple rebounds on the yellow line. After the breakout, we can see two significant price levels that act as resistance displayed by the horizontal red and blue lines. 

The blue line initially acts as a resistance. Although the stock experienced a pullback after touching the blue line, the price rebounded near its EMA 10 and continued its upward movement by breaking out and touching the red line. Yet again, the stock experienced another pullback and retested its previous resistance. However, the stock rebounded at the blue line, turning it from resistance to support. COIN consolidated for a while between the blue and red lines. During the consolidation, we can see the volume is dropping, which indicates the selling pressure is diminishing. The price maintained its upward trend by breaking out from the red line with a higher volume. 

Charts and data Provided by TradingView

In addition, the 30-minute chart of COIN shows the price is retesting its previous resistance. The red line that acted as a resistance has now become a support after the stock moved above the red line. We can observe a new resistance shown by the orange line. The orange line is proven to be a strong resistance after the price touched the line 3 times but failed to break. The price is currently pulling back to the red line. The red line is also a strong support after being touched twice. 

Conclusion

In conclusion, Coinbase displays a strong upward trend and provides opportunity for a long position setup. The price action combined with market sentiments regarding the Bitcoin ETFs signals a potential continuation of the upward trend. However, the shorter timeframe analysis shows the price is retesting its support. If the price rebounds, we can expect the price moving towards its resistance. 

Reference: Coindesk, Trust Wallet, Investopedia, Trading View

*SMA (simple moving average), EMA (exponential moving average), DMA (displaced moving average) are indicators used to show the trend of securities. However, they differ slightly and can be employed in different situations. SMA shows the average price over a time period while EMA places more weight on recent prices. Therefore, EMA is often favored when there is a significant price change recently. DMA refers to a moving average with all its values shifted forward or backward. It can be useful in forecasting trends. 

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