To The Moon

hey everyone, Wonton Investor here. let's talk about Coinbase again.

some of you on here might remember my two earlier $Coinbase Global, Inc.(COIN)$  posts. in December 2024 i pitched it as a Peter Lynch cyclical, a business whose earnings swing with the crypto cycle, so the trick is to buy it when things look dead. i said i'd only buy at a 20% discount to my ~$180 intrinsic value estimate, so under $150. then in mid-2025, after the GENIUS Act passed and the big institutions started building on Coinbase, i wrote that i was doubling down and that COIN had gone from a cyclical buy to a long-term foundational hold.

this is the follow-up i promised back then. it's mostly an accountability post.

getting lucky, then getting greedy

on Liberation Day in April 2025, COIN dipped to my $150 target and i bought. that part went exactly to plan, and i said at the time that i got lucky.

then i stopped following my own rule. the headlines kept getting better, i wrote the doubling-down post, and i kept adding as the stock ran, at prices nowhere near the discount i'd asked for. that's how a $150 entry turns into an average cost of around $253. the rule worked fine. i just dropped it once the trade started feeling obvious, which is exactly when Lynch says cyclicals get dangerous lol.

then the stock fell all the way back through my original level. the 52-week low was $139, and at the bottom i was down about 45% 💀

it's since bounced about 40% to around $200, so i'm down about 20% now. since then i've been trading a small slice around the core (adding around $170, trimming around $190) because it keeps bouncing in that range. the core position itself hasn't grown, and i haven't sold it.

what i got wrong in the thesis

two things, mainly.

first, "the boom is becoming permanent" didn't age well. Q2 2026 revenue was down about 19% year on year and transaction revenue fell 21% in one quarter. Coinbase is less cyclical than it used to be, but it's definitely still cyclical.

second, i used to say stablecoin revenue was a natural hedge: crypto crashes, people run to stablecoins, Coinbase earns more. but that revenue is basically interest rate × the amount of USDC, and both can fall together. in Q2, trading volumes fell about 25% and stablecoin revenue fell too, from $305M to $292M. it fell way less, so it cushioned the drop, but it didn't offset it. i had the mechanism wrong.

what went right: the revenue-sharing deal with Circle (the company that issues USDC) renewed on the same terms through 2029, which was the biggest risk to the thesis. and Coinbase hit a record 10.3% trading market share in a down market, which tells you more about the business than gaining share in a bull run would.

the full breakdown of what changed, including the crypto bill dying, Circle launching its own chain without Coinbase, and a proper for/against list, is in the long version on my substack (thewontoninvestor.substack.com).

why i'm holding, but not adding

for me, "should i sell?" is about whether the original thesis has broken, not whether the stock is down. i wrote out the things that would make me leave - the Circle deal going bad, USDC losing share at scale, regulators turning on the business model, or a serious rival to Coinbase's clearing business. none of them have happened. what happened is a bad crypto year, which was always going to come at some point with a cyclical.

if i'd sold at the August low, i'd have locked in -45% and missed a 40% bounce. most of the damage in long-term positions happens exactly like that, when people sell right at the bottom.

but i'm also not adding to the core, even though it spent the summer below the price i once said i'd buy at, and even though my 2025 post said i'd buy the next big dip. because the real mistake here isn't the entry price. it's that COIN drifted to about 40% of my stock portfolio.

at that size, my portfolio's result is basically just COIN's result, and it's way harder to think clearly when that much rides on one stock. so the plan is to hold, and bring the weight down with new money going into other things, instead of panic selling at the bottom.

so should YOU buy COIN? i'm not a financial advisor, so i can't tell you that. but if you're holding anything at 40% of your portfolio, the stock probably isn't your biggest risk. the size is.

Coinbase reports on Oct 29, and i'll post an update once the numbers are out.

on my substack i also wrote up three rules for valuing anything in crypto that i picked up from a Caffeinated Capital series this month (and how i failed one of them on my own stock). that's at https://thewontoninvestor.substack.com/p/everyone-pivoted-to-ai-i-still-hold-bc0?r=g6v1z if you want the full thing.

peace out,

The Wonton Investor

if you enjoyed this, follow me here for more. i'm also on X at @thewontoninvest.

disclosure: i hold COIN at a loss. not financial advice - just my own reasoning about my own money.