Base Attracts Numerous Projects and Funding: Coinbase Stock Price to Benefit Starting Q3

Market Review

Last week (8.7-8.13), the cryptocurrency market saw a small rebound, making a slight correction to the previous downturn.

The total market capitalization followed the previous trend and rose from $1.16 trillion to $1.18 trillion, an increase of approximately 1.7%. Currently, it has retraced to $1.17 trillion.

On August 9th, the market sentiment index dropped to 50, hitting a new low since June. It then experienced a slight rebound and is currently at 52.

Crypto Total Market Cap (yellow) and Fear & Greed Index (blue) trends from 2023.1.1 to 2023.8.13; Source: MacroMicro.

Mainstream coins had mixed performance last week, showing divergence, but the price movements were within 5 percentage points. Solana (SOL) performed the best with a 5% increase, followed by Uniswap (UNI) with a 4% gain. Bitcoin Cash (BCH) and Stellar (XLM) performed the worst, declining by around 4%.

Bitcoin's (BTC) price volatility was close to zero, with its market share increasing by 0.1% to reach 48.7%. Ethereum (ETH) saw a 2% price increase, while its market share decreased by 0.1% to 18.9%.

Price fluctuations of mainstream coins from 2023.8.7 to 2023.8.13; Source: MacroMicro.

Why are numerous projects and funds flowing into Base?

On August 9th, Base, a blockchain network created by Coinbase, officially went live, allowing developers and users to utilize it. According to the Base website, as of August 14th, Base has attracted 139 projects covering 9 domains, including DeFi, NFTs, wallets, and DAOs.

Furthermore, according to L2BEAT data, Base's total value locked (TVL) has seen a nearly 70% increase in the past 7 days, reaching $198 million. It ranks fifth among Ethereum Layer-2 projects, surpassing well-known projects like Immutable X and Loopring.

Top ten Ethereum Layer-2 projects by TVL; Source: L2BEAT.

Base has achieved impressive results in a short period of time, raising curiosity. In reality, Base, as an Ethereum Layer-2 project, does not have any significant advantages over Arbitrum, Optimism, and others in terms of technology and user experience.

However, being backed by Coinbase and having access to a large user base is the biggest attraction for DApps or projects. Projects like Uniswap and Sushiswap are eager to migrate their applications/protocols to the Base network, leveraging Coinbase's user base to convert them into their own users. Additionally, these projects' users may also become Coinbase users, creating a mutually beneficial relationship.

Will Coinbase stock price rise?

On July 19th, Coinbase's stock (ticker: COIN) rebounded to around $110, reaching its highest point in 2023. Since then, the COIN stock price has been continuously declining, and even the positive news of the Base mainnet launch hasn't changed the trend, which seems abnormal to investors.

Coinbase stock price daily chart; Source: TradingView.

Despite the favorable fundamentals, the stock price has been decreasing, indicating a deliberate manipulation by market makers to facilitate wash trading. However, the Base network is generating new revenue for Coinbase. According to data, Base is currently generating $100,000 in daily revenue, with peaks reaching $400,000. It's important to note that as the Base network develops and TVL increases, Coinbase will earn more revenue.

Base network TVL and revenue; Source: DeFiLlama.

Currently, Coinbase's revenue structure has changed with the addition of ecosystem revenue on top of trading fees and subscriptions/services. Initially, the incremental revenue may not be significant, but in the future, especially during a bullish market, it could potentially double.

Bitcoin has retraced and touched $28,000, with the next support at $25,000.

TheBlock's data shows that Bitcoin's volatility (BVIN) has reached a new low of 42 since 2023. The volatility over the past 7-8 months has frustrated investors, leading them to shift their attention towards speculative altcoins. 

On August 8th, Bitcoin surged to $30,000 but quickly retraced and traded around $29,500 for six consecutive days. This pattern has been observed for nearly two months, with a large bullish or bearish candle followed by five to six days of consolidation. 

However, this pattern has recently come to an end. Currently, Bitcoin has broken out of a descending triangle and is approaching its apex, indicating a potential market reversal in the next two weeks.

Bitcoin Price Chart from October 2022 to August 2023, Source: TradingView.

Since June, Bitcoin has shown a weakening trend with intermittent attempts from the bulls to rally, which have been quickly overpowered by the bears, often within the following day. Considering the current circumstances and the lack of positive expectations, the bears are more likely to dominate the market, and Bitcoin is expected to continue its downward movement towards $25,000 before a respectable rebound can be anticipated.