On Dec. 6, 2024, Coinbase's (COIN 16.93%) stock closed at $343.62 per share. That represented a 155% gain from the previous 12 months. The bulls embraced the leading cryptocurrency exchange again as President Trump's electoral victory lit a raging fire under many of the market's top cryptocurrencies. But after Coinbase's stock hit that three-year high, it plunged back to about $160. Let's see why it was cut in half -- and if it can recover over the next 12 months.

Why did the bulls embrace Coinbase in 2024?

As one of the world's largest crypto exchanges, Coinbase flourishes when rising crypto prices drive investors to trade more actively. But it flounders when the crypto market cools off, and investors pivot toward more conservative investments.

Image source: Getty Images.

That's why the past few years were tumultuous ones for Coinbase. In 2021, its revenue surged 514% as low interest rates, stimulus checks, and social media buzz drove more investors to accumulate cryptocurrencies.

But in 2022, its revenue dropped 59% as soaring interest rates drove investors toward safer investments. In 2023, its revenue dipped another 3% as that "crypto winter" continued.

However, the Federal Reserve cut its benchmark rate three times in 2024. Bitcoin (BTC 8.44%), the world's top cryptocurrency, also rallied nearly 120% in 2024 as the Securities and Exchange Commission (SEC) approved its first spot price ETFs, and it underwent its latest halving (which cuts its mining rewards in half every four years). Bitcoin's rally lifted many other smaller cryptocurrencies, and Coinbase's trading volumes and revenues soared.

Data source: Coinbase.

For the full year, Coinbase's revenue more than doubled to $6.6 billion as its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) more than tripled to $3.3 billion.

That explosive growth, along with the ascension of President Trump's crypto-friendly administration and expectations for more interest rate cuts in 2025, drove Coinbase's stock to its three-year highs by the end of the year.

Why did Coinbase's stock collapse?

Coinbase seemed poised for more gains in 2025, but the Trump Administration's tariffs on America's top trading partners are now sparking fears of a new crypto winter. Those headwinds are driving many investors back toward conservative investments.

Since the beginning of the year, Bitcoin's price has declined about 15% while Ethereum's (ETH 13.38%) price has plummeted more than 50%. Those prices could keep dropping if the "Liberation Day" tariffs spark an all-out trade war and global recession.

Where will Coinbase's stock be in a year?

For 2025, analysts expect Coinbase's revenue and adjusted EBITDA to rise 24% and 18%, respectively. For 2025, they expect its revenue and adjusted EBITDA to grow 3% and 6%, respectively.

With an enterprise value of $31.9 billion, it looks dirt cheap at four times this year's sales and eight times its adjusted EBITDA. If Coinbase meets those expectations and maintains the same forward EV/EBITDA ratio, its stock price could rise about 6% to around $167. That gain wouldn't be too impressive, but it would at least indicate Coinbase's stock is bottoming out.

However, investors need to take Wall Street's estimates with a grain of salt since Coinbase's future is still tightly tethered to the unpredictable crypto market. If the tariffs and other macro headwinds continue to shake investors out of speculative investments like cryptocurrencies, Coinbase could easily miss analysts' expectations.

I personally think Coinbase's stock will stagnate and underperform the market over the next 12 months. Even if cooler heads prevail and the U.S. lowers its tariffs, it could take a while for investors to develop an appetite for riskier cryptocurrencies again.