What Happened?

Shares of blockchain infrastructure company Coinbase (NASDAQ: COIN) jumped 12.1% in the afternoon session after the major indices rebounded (Nasdaq +1.4%, S&P 500 +1.0%) on hopes that the reported ceasefire between Israel and Iran will hold. 

This de-escalation in a volatile region helped to ease concerns about potential disruptions to global oil supplies, leading to a notable dip in crude oil prices. 

Additionally, dovish signals from Federal Reserve Chair Jerome Powell in his Congressional testimony, reaffirming a "wait-and-see" approach on interest rates, further calmed markets, improving investors' appetite for stocks and other risk assets.

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What The Market Is Telling Us

Coinbase’s shares are extremely volatile and have had 64 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 6 days ago when the stock gained 11.3% after crypto linked stocks secured a major victory as the Senate passed the GENIUS Act (a bill that outlines regulatory guidelines for stablecoins). 

Stablecoins are cryptocurrencies designed to keep a steady value, usually pegged to the U.S. dollar. The bill provides a much-needed legal framework and aims to build trust in digital assets. 

For Coinbase, a major player in the stablecoin market and the broader crypto ecosystem, this new law reduces regulatory uncertainty and could pave the way for increased institutional and retail adoption. 

To quantify the market opportunity, Treasury Secretary Scott Bessent told lawmakers that the U.S. stablecoin market could explode to over $2 trillion in the next few years, growing nearly eightfold. 

Adding to the positive news, Coinbase sought regulatory approval from the U.S. Securities and Exchange Commission (SEC) to offer tokenized equities. 

Coinbase's Chief Legal Officer, Paul Grewal, noted in a Reuters interview that the concept is a "huge priority." Barclays analysts weighed in, highlighting some of the merits, including "back-office cost savings, faster settlement times, and potentially easier facilitation of international access." 

This suggests that tokenized equities could help COIN expand its market share and ultimately grow its revenue as it offers more tradable assets and options to its users.

Coinbase is up 33.8% since the beginning of the year, and at $344.07 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 $1,048.

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