Coinbase Global, Inc., a leading platform in the cryptocurrency exchange realm, is currently facing a perfect storm of challenges that include regulatory scrutiny and a slump in the digital asset market. The company's stock has been on a downward trajectory amidst an unrelenting losing streak. This comes at a time when a fresh lawsuit from the state of Nevada targets its nascent prediction markets—just as the firm gears up to release its upcoming quarterly earnings report.
As of February 3, 2026, Coinbase shares plummeted lower for a staggering eleven consecutive trading sessions. February 4, saw an extension of this downward momentum, with shares falling over 4% against the backdrop of a broader downturn in cryptocurrency-related stocks, driven by declining Bitcoin prices. Currently, Coinbase stock trades at its lowest level since April 2025, having depreciated by approximately 24% since the year's onset.
The pressure on Coinbase's stock is largely due to a weakening environment for digital assets. Bitcoin, the most prominent cryptocurrency, has seen a significant fall from its highs experienced in October 2025. This decline directly affects Coinbase's core revenue stream, which is heavily reliant on trading fees. Nevertheless, the company reported an increase in assets under custody, reaching roughly $300 billion at the end of Q3 2025, up from the $220 billion noted at the end of 2024.
In addition to market woes, Coinbase faces a new legal challenge. The state of Nevada filed a lawsuit on February 4, 2026, alleging that certain event contracts available on Coinbase's prediction market platform breach state laws on illegal sports wagering. This legal obstacle threatens to derail Coinbase's strategy to diversify its business model away from pure cryptocurrency trading toward establishing itself as a holistic financial marketplace.
Coinbase launched these prediction markets nationwide in late January, collaborating with regulated provider Kalshi. The move forms a critical part of Coinbase's strategy to diversify its offerings. Beyond cryptocurrency trading, the company aims to offer a broader range of financial services, including entry into the stock trading space. However, the lawsuit casts doubt on the feasibility of these diversification plans.
Investors and market analysts eagerly await Coinbase's financial release for the fourth quarter of 2025, slated for February 12, 2026, after the U.S. market closure. The focus will be on trading volumes, which likely bore the brunt of Bitcoin's recent downturn. Additionally, the scrutiny will center on whether newer business segments sufficiently contribute to the company's revenue diversification.
The forthcoming quarterly results will be instrumental in revealing whether Coinbase's expansion strategies possess enough traction to mitigate weaknesses in its core cryptocurrency trading operations. Until these insights are made public, Coinbase's stock is likely to experience sustained volatility. For investors, the pivotal query remains: should they hold, sell, or even consider buying Coinbase amid these turbulent times?
