Coinbase at a Crossroads: Navigating the Bearish Trend or Seizing a Bullish Opportunity?

Updated On: March 28, 2025 6:13 pm

Market Sentiment Wavers as Coinbase Stock Approaches Death Cross

From a snapshot perspective of market sentiment, cryptocurrency exchange and services provider Coinbase Global Inc COIN does not appear to be walking on auspicious grounds.

Current circumstances are leaning toward the bearish side. Still, a shift in opinion may be emerging among savvy traders, often referred to as whales. This development could signal that bullish speculators might find a forthcoming opportunity in Coinbase Stock.

Bearish Indicators and the Death Cross

The prospect of an imminent uptick seems, at first glance, far-fetched. One of the most notable warning signs is the looming death cross. This technical occurrence happens when a shorter-term moving average, typically the 50-day, falls below a longer-term moving average, such as the 200-day moving average. The death cross symbolizes a slowdown in momentum, and it can indicate the potential onset of a protracted downturn or a bear market.

To clarify, Coinbase Stock has not yet officially printed a death cross, but it is very close to doing so. As of Friday, Coinbase’s 50-day moving average is at $239.54, while the 200-day moving average sits at $232.26—a gap of just 3.13%. Today’s significant drop has contributed to a five-day loss of approximately 12%, increasing the likelihood of this ominous signal materializing.

Additionally, analysts have cautioned that some cryptocurrencies are themselves at risk of showing a death cross. Given that Coinbase often serves as a proxy for the wider cryptocurrency market, declining confidence in this benchmark could negatively affect Coinbase stakeholders.

When the Death Cross May Signal Opportunity

Despite the foreboding nature of the death cross, certain scenarios might render this technical pattern as a contrarian bullish signal. Rather than predicting imminent doom, the bearish crossing of the moving averages might represent a buying opportunity.

Since its direct listing in April 2021, Coinbase Stock has experienced three death crosses:

On January 27, 2022, Coinbase’s 50 DMA dropped below the 200 DMA, closing at $170.20.
On June 22, 2023, Coinbase displayed the signal again, closing at $57.49.
On September 9, 2024, Coinbase last indicated a death cross with a closing price of $170.09.

Even with this limited history, it’s noteworthy that after each death cross, Coinbase Stock has seen an increase one month later. The post-death cross prices were $190.77, $98.85, and $213.72, yielding an average return of 36.56%.

Shifts in Whale Sentiment and Potential Price Targets

Further stoking speculation is the recent shift in sentiment among the whales. On March 18, Benzinga’s options scanner captured unusual options activity that was predominantly bearish. The most substantial transaction involved the sale of $300 calls expiring June 20 of this year, alongside other sold calls with a strike price of $150.

From the premiums received, it appears institutional traders do not anticipate Coinbase Stock will surpass the $190 level. Although this assessment may sound pessimistic, more recent options scans indicate a gradual shift in sentiment.

During the midweek session, the most significant non-neutral transaction involved the purchase of $5 calls expiring December 19, 2025. These ultra-deep in-the-money (ITM) calls were priced at a premium of $200.25. Adding this premium to the strike price suggests that traders are betting on Coinbase Stock exceeding $205.25 by the expiration date, likely with significant upward movement.

Notably, around the $175 level, Coinbase Stock is trading near a long-term support line. Consequently, a bounce in Coinbase shares is plausible, potentially manifesting as a dead-cat bounce.

Looking Ahead: The Possibility of a Rebound

As mentioned, the death cross has yet to occur, although its arrival may depend on the volatility of Coinbase Stock. It’s also crucial to acknowledge that historical patterns do not guarantee future outcomes. While Coinbase’s history has shown a “perfect” record following death crosses, there is no assurance that the next instance will yield favorable results.

However, should Coinbase Stock print the death cross next week, a rebound could manifest by the options chain expiration on May 2. On average, lower-performing death crosses have returned nearly 19%, implying a potential price target around $208. Thus, speculators have noteworthy avenues to explore.

For instance, aggressive traders may consider the 200/205 bull spread strategy. This involves buying the $200 call (currently at an ask price of $750) while simultaneously selling the $205 call ($550 bid). This strategy can reduce the overall cash outlay to $200, offering a $300 reward if Coinbase reaches the short strike price at expiration, equating to a 150% return.

For the same May 2 expiration date, ultra-aggressive traders might increase the risk by shifting the short strike to $210. This transaction would involve a net cash outlay of $310, with the maximum reward escalating to $690, representing a remarkable payout of nearly 223%.

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