What Happened?
Shares of blockchain infrastructure company Coinbase (NASDAQ: COIN) jumped 10.3% in the afternoon session after crypto-linked stocks rebounded sharply as Bitcoin broke above the $90,000 mark, reinforcing investor confidence in digital assets. The rally coincided with a weakening US dollar, which appeared to boost demand for assets considered alternative stores of value. Crypto, especially Bitcoin, has been evolving to be one of those spots people flock to when they're worried about inflation or the dollar losing value.
Bitcoin's strength not only lifted sentiment across the broader crypto market but also drove gains in related equities, such as mining firms and blockchain technology providers. The market reaction likely reflected expectations of rising trading activity, which typically translates into higher volumes, stronger sales, and profits for crypto tech providers.
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What The Market Is Telling Us
Coinbase’s shares are extremely volatile and have had 70 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 29 days ago when the stock gained 6.3% on the news that stocks rebounded (Nasdaq +2.0%, S&P 500 +1.5%) following a report from The Wall Street Journal stating that the Trump administration's reciprocal tariffs, to be announced on April 2, 2025, would be more narrowly targeted.
The market reaction indicated that investors took that as a sign the economic impact of the tariffs, particularly on inflation and growth, might not be as bad as they initially feared. That's a bit of a relief, which likely gave businesses and analysts some space to rethink their outlooks. Earlier, the administration had hinted at much broader tariffs that could have hit any country placing duties on U.S. imports, so this shift was likely a welcome surprise for the market.
Separately, stocks linked to digital assets rose as sentiment in the crypto space picked up, mirroring the improved appetite for risk assets. Notably, Bitcoin, the largest cryptocurrency by market cap, edged close to the $90,000 mark after falling as low as $79,000 earlier in the month.
Also, the crypto industry secured a notable victory in the previous week when Ripple CEO Brad Garlinghouse announced that U.S. regulators had dropped a four-year-long case against the company. The lawsuit stemmed from Ripple's $1.4 billion fundraising through the sale of XRP tokens, which regulators had previously classified as securities, subjecting them to strict securities rules. However, it seemed some of these measures were being relaxed.
For context, Ripple was the third-largest cryptocurrency by market cap when this news hit. That's big because it means a lot of traders and investors likely have exposure to it. When a major token like this gets regulatory relief, it can reinforce positive sentiment in the broader crypto market.
Coinbase is down 25.4% since the beginning of the year, and at $191.87 per share, it is trading 44.2% 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 $584.47.
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