Coinbase (COIN 2.30%) has been one of the best-performing stocks in 2023. As of Dec. 15, shares are up a whopping 320%. The business is posting solid financial results amid a bull market for digital assets.

As we look toward the new year, will this top cryptocurrency stock continue to boom for investors? Or will it be a huge disappointment? Let's take a look at both sides of the argument for Coinbase.

The bulls are raging

Coinbase is riding a wave of momentum right now. In the three-month period that ended Sept. 30, the business exceeded Wall Street forecasts. This helps explain why shares are up about 80% since that financial update on Nov. 2.

For the company to continue performing well from a fundamental perspective in 2024, there's one thing that must happen without a shadow of a doubt: rising crypto asset prices. This has certainly been a key theme this year. The overall crypto market cap is currently at $1.6 trillion, which is roughly double what it was at the start of 2023.

Of course, Coinbase will need to benefit from these higher crypto prices by generating more revenue from the favorable market environment. For starters, this means bringing more users to the platform. Through the first nine months of 2023, the company counted 7.5 million monthly transacting users, down from 8.9 million in the year-ago period.

Attracting more users is one piece of the puzzle, but Coinbase will need to increase its transaction revenue as well. A major chunk of the company's sales come from facilitating cryptocurrency trades for individuals and institutions. These fees declined 21% in the third quarter, which is surprising, given how strongly the crypto market has performed.

Another factor that could be a boon for shares is efficiency gains across the organization. Coinbase has done a great job at lowering its costs during the past year. Operating expenses have dropped significantly, mainly due to a reduced employee headcount.

Although the business is still posting a net loss, it's inching toward breakeven. Should positive profit come to fruition next year, it would be another advantageous trend working in Coinbase's favor.

The uncertainty is hard to ignore

A valid case can also be made that Coinbase shares will be a complete bust in 2024. What goes up can also come down, and this reality is no more obvious than in the cryptocurrency market. Just look at what happened in 2022, when the Federal Reserve hiked rates rapidly and crypto prices tanked. Coinbase's operations were crushed.

The Fed might have signaled multiple rate cuts in 2024, which is beneficial for risky assets, but the volatile nature of cryptocurrencies means there's really no telling what will happen next. And based on price action this year, this optimism may already be fully priced in.

Investors should also understand the potential negative impact of lower interest rates on this business. Coinbase has seen its stablecoin revenue surge 123% year over year to become the biggest contributor of subscription and services revenue in Q3. This is thanks to higher interest rates.

If interest rates decline, a very important revenue driver this year will start to be a financial headwind in 2024.

The approval of Bitcoin spot exchange-traded funds will be a win for Coinbase because the company is listed as a custodian for a lot of these products, including BlackRock. This could put Coinbase in a better standing with regulators.

But its operations, as they relate to all the altcoins in the market, still present risks. The fact that every other cryptocurrency besides Bitcoin can be ruled as a security adds a regulatory overhang that could weigh on the shares. There's no way of knowing ahead of time what will happen.

Coinbase has absolutely crushed the market this year, and supporters want the good times to keep rolling in the new year. However, I think it's a complete toss-up as to what the stock will do in 2024 because of just how unpredictable crypto asset prices are in the near term. It's best to avoid making any strong forecasts with this business due to the uncertainties.

On the other hand, if you are bullish on blockchain and digital assets over the very long term, then maybe Coinbase is a smart investment.