Shares of Coinbase (COIN) closed last week with a sharp 19.6% loss, marking the exchange’s worst weekly performance since September 2024. The drop follows disappointing second-quarter earnings and growing concerns among investors about valuation versus fundamentals.
Earnings Report Misses Key Expectations
Coinbase’s Q2 earnings revealed a net operating earnings per share of just $0.12, representing an 88.8% year-over-year decline. Revenue came in at $1.5 billion, below market expectations of $1.59 billion, while EBITDA dropped to $512 million due to a steep 39% fall in transaction revenue.
This performance has intensified concerns that Coinbase’s stock rally in Q2 was outpacing its underlying business metrics.
Analyst Sentiment Turns Bearish
Investment analysts had already flagged valuation concerns in late June. One firm called the Q2 rally “overstretched” and recommended a short position on COIN alongside long exposure to Bitcoin. Another downgraded the stock from Buy to Sell early in July, citing misaligned expectations.
Such warnings appear to have materialized as earnings revealed a widening disconnect between market enthusiasm and financial performance.
Options Traders Hedge Against Further Losses
The steep drop in share price has triggered a surge in demand for downside protection. As of Friday, the put-call skew on COIN options rose to 2.6%, the highest level since April. This metric reflects a higher premium for put options, which provide insurance against further declines in share price.
Options traders are clearly preparing for continued volatility, with puts now trading at a notable premium over calls.
What to Expect Going Forward
Unless Coinbase can rebound with stronger transactional growth or regulatory clarity, market sentiment may remain cautious. Key support levels to watch are near $300 and $285, while resistance remains around the $330 mark.
With both retail and institutional investors eyeing option protection, Coinbase may face a rocky road unless fundamentals begin to improve.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.