Coinbase Is Down More Than 60% Over the Past 12 Months. Here's Why I'm Bearish on COIN Stock.

Coinbase's (NASDAQ: COIN) stock has declined more than 60% over the past 12 months. The major cryptocurrency exchange lost its luster as fears of interest rate hikes and other macro headwinds chilled the crypto market. That pullback might seem like a buying opportunity for contrarian investors, but I expect its stock to sink even lower before it's considered a bargain.

Why did Coinbase's stock crash?

Coinbase generates most of its revenue by charging transaction fees for spot crypto trades. When interest rates are low, cryptocurrencies often rally as investors pivot toward riskier investments. The opposite happens when interest rates rise, and the crypto market cools off.

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Last year, many investors expected the Fed to continue cutting rates in 2026 as inflation cooled. But after the outbreak of the Iran war, oil prices surged and inflation heated up again. As a result, many investors are now bracing for interest rate hikes in the second half of 2026. In other words, the crypto market could remain chilly for the foreseeable future.

At the same time, Coinbase faces intense competition from its bigger rival, Binance; traditional brokerages that are expanding into the crypto market, and a growing list of fintech apps that also offer cryptocurrency trading. Stablecoins, which accounted for nearly a fifth of its top line in 2025, also face an uncertain future as the CLARITY Act remains stalled in the Senate. The broader crypto market also faces unpredictable regulatory headwinds worldwide.

Coinbase is cutting costs and pruning its workforce to offset that pressure, but it still posted back-to-back quarterly losses in the fourth quarter of 2025 and the first quarter of 2026.

All of those issues are driving investors away from Coinbase, even though it seems reasonably valued right now at 21 times this year's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). From 2025 to 2028, analysts expect its revenue and adjusted EBITDA to grow at CAGRs of 5% and 7%, respectively. However, we should take those estimates with a grain of salt, since they're pegged to the unpredictable crypto market.

Why am I bearish on Coinbase's stock?

Coinbase established an early mover's advantage in the crypto market, but it faces too many macro, competitive, and regulatory challenges to be considered a safe investment. Coinbase might eventually bounce back, but it won't attract more attention until interest rates stabilize, the CLARITY Act passes, and it finds more ways to widen its moat against its competitors.

Leo Sun has no position in any of the stocks mentioned. The Motley Fool recommends Coinbase Global. The Motley Fool has a disclosure policy.