Coinbase Stock Has Ballooned Nearly 60% in 5 Days

Crypto equities on the whole are outperforming, but the rally may not last, one digital asset hedge fund manager told Blockworks


Blockworks exclusive art by axel rangel


key takeaways

  • The crypto exchange’s stock has outperformed both the broader stock market and rival digital asset-focused firms
  • The rally comes after the exchange’s sell-off amid ongoing SEC woes

Coinbase rallied 16% midway through Thursday’s trading session, bringing the stock’s five-day gains to nearly 60% — and leaving the bulk of crypto-related equities and big technology stocks in the dust. 

Bitcoin-friendly business intelligence firm MicroStrategy and crypto financial services firm Galaxy Digital have locked in gains of 15% and 14% over the last five trading days, respectively. 

The tech-heavy Nasdaq, meanwhile, gained a scant 1% over the same period. 

Coinbase ranked third on Fidelity’s top buys and sells rundown with 2,198 buy orders and 2,858 sell orders Thursday afternoon. 

Coinbase’s run-up followed news breaking of the exchange’s prime brokerage service partnering with asset manager BlackRock to offer institutional trading, a development industry participants hope will catapult crypto adoption. Prime brokerage units, long under the purview of investment banks, extend to institutional buy-siders services including clearing trades, proving leverage and capital-introduction. 

“I think it has mostly to do with the BackRock news,” David Tawil, president and co-founder of Prochain Capital, said. “Maybe more of a short-squeeze than a true rally.”

Coinbase’s bounce comes shortly after the stock dipped, following the SEC’s probe into a former product manager accused of insider trading. The regulator also deemed nine tokens traded on the exchange securities, potentially creating complications when it comes to licensing and regulatory brokerage requirements. 

Even so, after a period of declines, crypto equities such as digital asset-focused lender Voyager — up 38% over the past five days — and crypto bank Silvergate Capital — up 11% — are outperforming broader stock and digital asset markets. 

It’s too early to project a long-term trend, though, Tawil said. 

“[This] may be just rebalancing; crypto stocks performed a lot worse relatively last month,” he said. 

Bitcoin and ether dipped through Thursday in New York, losing 2% and 5%, respectively. 

“Bitcoin appeared to be finding fresh support on Wednesday, but that has quickly stalled which could be a concern,” said Craig Erlam, senior market analyst at Oanda. “Especially amid an improvement in risk appetite across the markets.”

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