ChainTech Africa

June 27, 2025
A new report from 10x Research suggests that a short COIN / long Bitcoin (BTC) trade setup could offer outsized returns in the near term, as Coinbase (COIN) stock approaches what analysts describe as “overstretched and overvalued” territory.

In the note published Wednesday, 10x Research said the crypto exchange’s recent price surge—fueled by regulatory clarity, increased trading volumes, and rising institutional adoption—may have outpaced fundamental earnings potential, especially compared to the relative value offered by Bitcoin itself.

“Coinbase has rallied nearly 70% in the last two months, buoyed by optimism in U.S. crypto policy and retail re-entry,” wrote Markus Thielen, head of research at 10x. “However, this exuberance now warrants caution. The stock is pricing in perfection, while Bitcoin still trades below its all-time high.”

The Case for the Pair Trade

10x argues that COIN’s valuation is vulnerable to any slowdown in trading activity or macro shifts that affect equity markets more broadly. The stock, which is closely correlated with crypto market sentiment, has historically outperformed Bitcoin during bull runs—but also underperformed sharply in drawdowns.

By contrast, Bitcoin—which has reclaimed the $104,000 level—offers a more direct play on the digital asset trend without the equity-specific risks tied to company operations, compliance costs, and investor expectations.

“We believe a short COIN / long BTC position allows investors to benefit from continued optimism in digital assets while hedging against a likely retracement in Coinbase’s inflated stock,” the report said.

The strategy, commonly used by hedge funds, involves short selling Coinbase shares while simultaneously taking a long position in Bitcoin, profiting from relative underperformance in COIN versus BTC.

Coinbase: Riding High on Momentum

Coinbase shares have surged since early April, benefiting from:

• Bipartisan momentum behind U.S. crypto legislation.

• A rise in trading revenue due to Bitcoin ETFs and market volatility.

• Strategic partnerships, including a new stablecoin payment stack tied to Shopify.

The stock recently traded near $302, marking a dramatic recovery from its 2022 lows under $40. But analysts caution that the rally may be running on fumes.

“While Coinbase is fundamentally stronger than it was two years ago, it’s now priced like a high-growth fintech, not a cyclical exchange,” said Ava Leung, a digital asset equity analyst at QuantLabs.

Macro, Regulation, and Technicals in Focus

Bitcoin itself has benefited from growing institutional inflows, ETF adoption, and expectations of looser monetary policy heading into Q4 2025. 10x Research forecasts a medium-term Bitcoin target of $115,000, while projecting COIN could fall back toward $240–260 in a normal market retracement.

The report also cites historical technical divergence, with Coinbase’s relative strength index (RSI) entering overbought territory, while Bitcoin remains in a more stable range—suggesting a mean reversion setup is developing.