Coinbase stock, is up 35% since the Securities and Exchange Commission (SEC) filed a lawsuit accusing the platform of selling unregistered securities. The unexpected turn of events has surprised investors and industry experts as Coinbase defied market expectations and emerged stronger amidst regulatory challenges.
In early June, there was a significant decline of around 20% in Coinbase shares following the Securities and Exchange Commission’s high-impact lawsuits against Binance and Coinbase. However, there has been a recovery for Coinbase stock, with a subsequent increase of approximately 35% after reaching a low point of around $51 on the day of the SEC’s lawsuit against the largest cryptocurrency exchange in the United States. As of Wednesday morning, the shares were traded near $70, resulting in a market capitalization of about $16.4 billion for the publicly traded company.
Coin Base’s Resurgence Mirrors the Crypto Market’s Rebound Amidst Wall Street’s Bitcoin Fever
Coinbase’s recovery reflects the wider rebound of the cryptocurrency market in June, driven by a renewed interest in Bitcoin fueled by Wall Street. This resurgence has not only lifted other cryptocurrencies but has also injected optimism into an industry that was previously dealing with a series of regulatory actions from the federal government.
According to Omid Malekan, an adjunct professor at Columbia Business School specializing in the crypto market, “The rally in Coinbase stock and the surge in Bitcoin price are often intertwined and tend to reinforce each other,” he told Fortune.
In particular, the revival of Bitcoin is closely linked to BlackRock’s unexpected move of applying to a Bitcoin spot exchange-traded fund (ETF). This filing from the world’s largest asset manager in the United States signifies a significant vote of confidence in the market-leading cryptocurrency, considering its substantial market capitalization.
Bitcoin’s Soaring Price Triggers Surge in Asset Manager Interest
Following the public disclosure of BlackRock’s application, the price of Bitcoin experienced a sharp surge, reaching its highest value in over a year. This surge was accompanied by a wave of other asset managers filing applications for Bitcoin spot ETFs, which can potentially attract trillions of dollars from brokerage accounts and pension funds into the cryptocurrency.
The impact of Bitcoin’s rally also extended to the overall market, as the combined market capitalization of all cryptocurrencies increased from approximately $1 trillion to around $1.17 trillion.
Furthermore, Malekan highlighted that BlackRock’s ETF filing not only demonstrated confidence in Bitcoin but also in Coinbase. The application explicitly stated that the publicly traded cryptocurrency exchange would serve as the custodian for holding the underlying Bitcoin of the trust.
He shared with Fortune, “For them to designate Coinbase as a custodian for their ETF sends a strong signal that the SEC allegations are not as significant as perceived.” According to Malekan, this indicates that the market is conveying a message that the worst of the regulatory crackdown by U.S. authorities is likely in the past.
As the coinbase stock is up 35%, it is a notable recovery after a significant decline, aligning with the broader resurgence of the cryptocurrency market. The filing of a Bitcoin spot ETF application by BlackRock, the largest asset manager in the United States, has played a pivotal role in boosting Bitcoin’s price and instilling confidence in both Bitcoin and Coinbase. The move by BlackRock and other asset managers showing interest in Bitcoin ETFs suggests a growing acceptance of cryptocurrencies in traditional finance. This positive sentiment reflects a belief that the worst of the regulatory challenges may be behind the industry, signaling a potentially brighter future for the crypto market.