Coinbase shares soar thanks to meme traders and BlackRock crypto deal

The logo of Coinbase Global Inc, the largest U.S. cryptocurrency exchange, is displayed on the jumbotron of the Nasdaq MarketSite and others in Times Square in New York, U.S. April 14, 2021.

Shannon Stapleton | Reuters

Stock Coinbase soared on Thursday after the cryptocurrency exchange announced a partnership with BlackRock that will allow its institutional clients to buy bitcoin.

Coinbase shares last up 14%. Earlier in the day, they jumped as much as 40%.

Services under Prime’s offering will be available to clients of Aladdin’s BlackRock portfolio management platform for institutional investors, the company said in a blog post. Coinbase will provide cryptocurrency trading, custody, prime brokerage, and reporting capabilities. BlackRock is the largest asset manager in the world with over $8 trillion under management.

According to alternative data provider Quiver Quantitative, the ticker COIN also became one of the most mentioned names on WallStreetBets Reddit on Thursday, surpassing GameStop’s popularity on an online forum.

“Our institutional clients are increasingly interested in gaining access to digital asset markets and are focused on how to effectively manage the operational lifecycle of these assets,” Joseph Chalom, Global Head of Strategic Ecosystem Partnerships at BlackRock, said in a statement. The partnership will allow them to “manage their bitcoin exposure directly within their existing portfolio management and trading workflows.”

This interest is a beacon in the night for the crypto community. Just this week, the industry has been hit by multiple hacks and hacks, including attacks on Solana and Nomad. The cryptocurrency also fell due to a wider sell-off of risky assets and was further hit by the financial contagion caused by the Terra crash in the spring. Many investors argue that institutional adoption is the key to increasing the maturity, stability, and price of bitcoin and possibly the wider crypto market.

Coinbase stock has been falling lately and analysts don’t know why. Shares jumped 20% on Wednesday. Shares are still down nearly 70% in 2022 through Wednesday’s close.

The unusual spike on Coinbase this week could be due to investors betting that the stock was trying to cover its short positions, a so-called short squeeze. According to FactSet, more than 22% of the Coinbase shares available for trading are short. So if the stock is down, these investors have to buy back the stock to cover their losses, further fueling the gains.

— Yoon Lee of CNBC provided the report.