Coinbase Shares Rise as Crypto-Related Stocks Continue Post-Fed Rally
Shares in crypto exchange Coinbase (COIN) jumped more than 20% on Thursday after the Federal Reserve’s latest rate hike and Fed chief Jerome Powell noted progress in the fight against the high rate of inflation.
The US-based exchange also received a boost after it won a dismissal on Wednesday of a proposed class action by customers who claimed Coinbase sold them unregistered securities.
The company’s shares are up more than 100% this year as the crypto industry began to recover from the collapse of the FTX exchange. Because Coinbase earns most of its revenue from trading volume, its share price is highly correlated with bitcoin (BTC), which has rallied so far this year.
British bank Barclays said in a note Thursday that Coinbase volumes rose 56% in January from the previous month, and that “volumes are now close to levels seen in October before the collapse of FTX, but remain below the 2022 average.”
Most crypto-related stocks are also on the rise, along with the broader equity markets. Business software company MicroStrategy ( MSTR ), which sometimes acts as a bitcoin proxy due to the large amount of its holdings, rose around 10%, while crypto bank Silvergate Capital ( SI ) shares rose more than 30% on Thursday.
“We may get six more weeks of winter, but it doesn’t look like we’re going to see an ice age in crypto,” said Edward Moya, senior market analyst for forex market maker Oanda, referring to the latest Groundhog Day forecast. “January was a robust month for crypto and [Federal Open Market Committee rate] the decision helped keep all risk assets higher,” he added.
Meanwhile, crypto miners, who are heavily exposed to the price of bitcoin, are also outperforming. Shares of miners Marathon Digital (MARA), Riot Platforms (RIOT), Hive Blockchain (HIVE), CleanSpark (CLSK) and Hut 8 (HUT) were among those climbing more than 10%. Peer Cipher Mining (CIFR) outperformed the group, rising more than 20%, after hitting an all-time high in computing power in January.
The largest cryptocurrency by market capitalization, bitcoin traded as high as $23,830 on Thursday, while ether (ETH), the native symbol of the Ethereum blockchain, rose 2% to trade at $1,675 at press time.
“Bitcoin is riding on this risk-on sentiment from Wall Street, but it may struggle to break above massive resistance from the $25,000 level,” Moya noted.
The technology-heavy Nasdaq index rose about 3%, while the S&P 500 was up 1.3% on Thursday.
UPDATE (February 2, 2023 17:43 UTC): Adds analyst commentary.
