What Happened?
Shares of blockchain infrastructure company Coinbase (NASDAQ: COIN) jumped 6.8% in the afternoon session after the company announced the acquisition of Deribit for $ 2.9 billion to expand its capabilities in the rapidly growing derivatives market. The deal was made to cater to institutional investors and retail traders who are increasingly more sophisticated. The stock's reaction suggests that the market thinks the deal will strengthen COIN's competitiveness and improve its growth trajectory in the crypto space.
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What The Market Is Telling Us
Coinbase’s shares are extremely volatile and have had 65 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 6 months 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 was 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 were anticipating favorable measures. This justified reaction followed comments by Donald Trump as he pledged to make the United States the "Bitcoin superpower" of the world.
Coinbase is down 18.8% since the beginning of the year, and at $208.93 per share, it is trading 39.2% below its 52-week high of $343.62 from December 2024. Investors who bought $1,000 worth of Coinbase’s shares at the IPO in April 2021 would now be looking at an investment worth $636.45.
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