Coinbase stock soared on Thursday after the cryptocurrency exchange announced a partnership with BlackRock that will allow its institutional clients to engage in cryptocurrency transactions. The shares rose by as much as 40% earlier on Thursday.
With over $8 trillion in assets under management, BlackRock is the largest asset manager in the world. The company announced on its blog that Aladdin clients (clients of BlackRock’s portfolio management platform for institutional investors) would have access to the services in the company’s prime offering. Coinbase will offer cryptocurrency custody, crypto trading, prime brokerage, and reporting services.
According to alternative data firm Quiver Quantitative, the ticker COIN also surpassed GameStop in terms of popularity in the WallStreetBets chat channel on Reddit on Thursday.
According to Joseph Chalom, global head of strategic ecosystem partnerships at BlackRock, “Our institutional clients are increasingly interested in gaining exposure to digital asset markets and are focused on how to efficiently manage the operational lifecycle of these assets.”
This enthusiasm serves as a beacon in the dark for the cryptocurrency industry. The sector is witnessing an unprecedented series of hacks and security breaches, including this week’s attacks on Solana and Nomad.
Additionally, cryptocurrency has suffered from the general sell-off in risk assets as well as the financial fallout from the Terra collapse in the spring. Many investors believe that institutional acceptance is critical to the advancement, stability, and price of bitcoin, as well as the larger crypto market.
Analysts are puzzled as to why Coinbase stock has recently surged. On Wednesday, the stock rose by 20%. By the end of Wednesday, the shares were still down roughly 70% for the year 2022.
This week’s unexpected increase in the share price of Coinbase may have been caused by investors who were betting against the stock, scrambling to close off their short bets, also known as a “short squeeze.” According to FactSet, more than 22% of Coinbase’s publicly traded shares are being sold short. As a result, since the company’s value has increased, these investors must buy back the shares to compensate for their losses, fueling the upward rally.
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