What Happened?
Shares of cryptocurrency exchange Coinbase (NASDAQ:COIN) jumped 18.9% in the afternoon session after stocks linked to the cryptocurrency sector surged after Bitcoin surpassed $80,000, reaching a new all-time high.
The improved sentiment echoes growing optimism that the Trump administration will adopt more supportive policies toward the crypto industry. This narrative earned even more credibility after Republicans regained control of the Senate during the 2024 elections, implying more predictable and stable policies. With supportive policies, there could be increased adoption and integration of cryptocurrencies in mainstream financial systems.
Also, rising asset prices typically improve investor confidence, prompting traders and investors to increase their participation by placing new bets or engaging in more frequent trading.
This heightened trading activity translates into higher transaction volumes and more revenues for trading platforms like Coinbase and Robinhood that earn fees on these trades.
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What The Market Is Telling Us
Coinbase’s shares are extremely volatile and have had 78 moves greater than 5% over the last year. But moves this big are rare even for Coinbase and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 5 days ago when the stock gained 28.6% on the news that stocks rallied as Republican party candidate Donald Trump was declared the winner of the 2024 US presidential election.
The market is trying to assess the impact of some of the anticipated changes under the new administration, mostly relating to trade decisions that affect semiconductor and defense stocks, regulatory measures in the crypto and energy industries, and the broader impact of new measures on key economic indicators tracked by the Fed, notably inflation.
After the election was called, Bitcoin hit a new all-time high, pushing past the critical $75k mark. The market reaction suggests investors are anticipating favorable measures. This justified reaction follows recent comments by Donald Trump as he pledged to make the United States the "Bitcoin superpower" of the world.
Coinbase is up 109% since the beginning of the year, and at $327.48 per share, has set a new 52-week high. Investors who bought $1,000 worth of Coinbase’s shares at the IPO in April 2021 would now be looking at an investment worth $998.39.
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