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Coinbase stock up 90% in a month; What’s behind COIN surge?

Coinbase stock up 90% in a month; What's behind COIN surge?

Despite the Securities and Exchange Commission (SEC) initiating a lawsuit against Coinbase (NASDAQ: COIN) last month, the company’s stock has been on an impressive rally in recent weeks.

To be more specific, the crypto exchange’s shares rallied over 90% over the past month, surging from $55.61 on June 20 to $105.55 as of July 18. Over that period, COIN’s market cap nearly doubled from $13.37 billion to $24.82 billion.

COIN 1-month stock chart. Source: TradingView

In the last week, Coinbase’s stock rose by more than 33%, likely fueled by optimism among crypto investors after Ripple Labs secured a partial legal win against the SEC on July 13. 

The exchange’s year-to-date gains stand at almost 190%, making it one of the best-performing crypto-related stocks this year.

Why is COIN pumping?

Coinbase’s remarkable stock market performance this year can be attributed to a mix of factors. 

Primarily, the key driver behind COIN’s rally in 2023 is the drastic rebound in Bitcoin (BTC) and other cryptocurrency prices following a massive downturn in 2022.

The world’s largest crypto coin is up more than 80% year-to-date, lifted by improving macroeconomic conditions and growing hype around potential mainstream adoption among institutional investors.

Namely, last month, Wall Street titan BlackRock (NYSE: BLK) filed with the SEC to launch a spot Bitcoin exchange-traded fund (ETF). Shortly afterward, a string of traditional finance (TradFi) institutions followed suit, providing a much-needed boost to investor sentiment and ultimately, crypto prices.

Coinbase shares rally again on Ripple’s win against the SEC

More recently, cryptocurrencies and crypto-related equities, including Coinbase, witnessed another rally last week after a US judge ruled that Ripple Labs did not breach securities regulations by selling the associated XRP token on public exchanges years ago.

The ruling marked a landmark legal triumph for the crypto industry and a substantial boost to Ripple in its nearly 3-years-long battle against the securities regulator. In December 2020, the SEC filed a lawsuit against Ripple and its executives for allegedly raising $1.3 billion through an unregistered securities offering.

Coinbase investors have seen the Ripple ruling as an important precedent, given that the crypto exchange was also sued by the SEC last month for offering unregistered securities on its platform, according to Berenberg analyst Mark Palmer.

“We believe the surge [in Coinbase stock] was driven in large part by investors who interpreted Judge Torres’ ruling as representing a rejection of the SEC’s argument in the lawsuit it filed against Coinbase.”

– Palmer wrote.

Another factor that contributed to COIN’s impressive run is the company’s 23% revenue growth in Q1, following a challenging 2022. 

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