Coinbase shares soar nearly 20% in boost from meme traders, BlackRock crypto deal

The logo of Coinbase Global Inc, the largest U.S. cryptocurrency exchange, is displayed on the Nasdaq MarketSite jumbotron and others at Times Square in New York, U.S., April 14, 2021.

Shannon Stapleton | Reuters

Shares of Coinbase spiked on Thursday after the crypto exchange announced a partnership with BlackRock that will allow its institutional clients to buy bitcoin.

The last time Coinbase stock was up 25.2%. Earlier in the day, they were up at most about 40%.

The services in the company’s Prime offering will be available to customers of BlackRock’s portfolio management platform for institutional investors, Aladdin, the company said on its blog. Coinbase will provide crypto trading, custody, primary brokerage, and reporting capabilities. Black stones is the largest asset manager in the world with over $8 trillion under management.

The COIN also became one of the most talked about names on Reddit’s WallStreetBets on Thursday, topping GameStop’s popularity online, according to alternative data provider Quiver Quantitative.

“Our institutional clients are increasingly interested in exposure to the digital asset market and are focused on how to effectively manage the lifecycle of these assets,” said Joseph Chalom, head of digital asset management. global leader in strategic ecosystem partnerships at BlackRock, said in a statement. The partnership will allow them to “manage their bitcoin exposure directly within their existing trading and portfolio management workflows.”

That interest was a beacon of the night for the crypto community. The industry has suffered a spate of attacks and breaches, including attacks on Solana and Nomad just this week. Cryptocurrencies have also gone down with a broader sell-off of risk assets and further constrained by the financial contagion stemming from Terra’s collapse in the spring. Many investors see institutional adoption as key to increasing the maturity, stability, and price of bitcoin and perhaps the broader crypto market.

Coinbase shares have recently fallen, and analysts aren’t sure why. Shares were up 20% on Wednesday. Shares are still down nearly 70% in 2022 through Wednesday’s close.

Coinbase’s unusual jump this week may be related to investors betting against scrambling for shares to cover their short positions, known as a short hold. According to FactSet, more than 22% of Coinbase shares available for trading are shorted. So, once the stock has run, these investors have to buy back the stock to cover the loss, further driving profits.

— CNBC’s Yun Li contributed reporting.

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