Yesterday, Coinbase (NASDAQ:COIN) announced a partnership with the world’s largest money manager BlackRock — which will let BlackRock clients manage and trade Bitcoin through Coinbase.

COIN

jumped 10% from the news — following a major 79% rally since July alongside crypto prices. But before investors chase the rally thinking Coinbase has bottomed, there are a couple of questions they need to ask…

How’s Coinbase doing compared to competitors?

In the first quarter of 2022, Coinbase’s revenue fell by over 50% compared to the previous quarter — greater than the 40% drop in trading volume across major exchanges.

• Losing half their revenue hurts — but it hurts more when they’re falling further than competitors.
• Coinbase has lost market share to competitors, including FTX and Binance — both continuing their U.S. expansion.

Per The Block’s data, crypto trading volumes have stabilized but are still well below their 2021 levels. Coinbase’s recovery depends on the direction of the crypto market…

Where does the crypto market go from here?

We’re in that awkward market stage where several indicators point to a bottom — but investors still don’t have an appetite for risky assets.

Per Miller Tabak + Co. Chief Market Strategist, crypto has two challenges ahead (BBG):

• “As long as the Fed is tightening, it’s going to be hard for it [crypto] to see a sustained rally.”
• Crypto “has lost a lot of confidence with investors, so it’s going to take time for it to regain that confidence.”

TD Ameritrade Head Trading Strategist thinks Bitcoin will “tread water here for a little bit,” while others see these price levels as attractive.

Alex Tapscott of Ninepoint Partners’ Digital Assets Group says the risk-reward is skewed to the upside. “For the long-term investor, this is a rare and tantalizing entry point.”

Watch: Coinbase reports earnings next week on Aug. 9.