Coinbase Shares Soar 12% As BlackRock Partnership Fuels Optimism

  • Asset management giant BlackRock re-filed its application for a Bitcoin ETF, including a surveillance-sharing agreement with US cryptocurrency exchange Coinbase, prompting a 12% surge in Coinbase's shares.
  • The surveillance agreement between Coinbase and Nasdaq aims to enhance the exchange's market surveillance program, providing access to spot Bitcoin trading data which could help with the approval of BlackRock's Bitcoin ETF.
  • Although many futures-based ETFs have been approved, the SEC has yet to sanction a spot-based one. Notably, the strong performance of Coinbase's stock, which has seen a 140% increase since the start of 2023, demonstrates investor confidence in the company and the broader cryptocurrency market.

The world’s leading cryptocurrency exchange, Coinbase, has seen a 12% surge in its share value after BlackRock, the global asset management giant, named it as a surveillance partner in its freshly re-filed Bitcoin Exchange-Traded Fund (ETF) application. This news has left a positive impact on South African investors and traders, who are increasingly invested in the global cryptocurrency marketplace.

On July 3rd, it was announced by Nasdaq that BlackRock had renewed its application for a spot Bitcoin ETF, with added details concerning an arrangement with Coinbase, a prominent US cryptocurrency exchange. This collaboration has proven to be a significant boost for Coinbase’s shares and for the cryptocurrency markets at large.

The BlackRock-Coinbase Connection

BlackRock was one of several fund managers who were compelled to reapply for their ETF licenses after the Security and Exchange Commission (SEC) labelled the applications filed by Nasdaq and the Chicago Board Options Exchange (Cboe) on their behalf as “insufficient”. The updated filing included information about an agreement made between Coinbase and Nasdaq, aimed at “supplementing the exchange’s market surveillance program” and providing access to spot BTC trade data.

Nasdaq “plans to receive market data concerning orders and trades from Coinbase,” which it will leverage for surveillance of the trading activities of the BlackRock Bitcoin ETF, if approved. While the SEC has given the go-ahead to numerous futures-based ETFs, it has not yet given a nod to a physically backed, spot-based one.

Industry insiders believe this to be an effort by the SEC and Wall Street to gain control over the asset class, following a significant clampdown on crypto companies in the US this year.

Coinbase has also been listed as a surveillance-sharing partner by several other firms such as Fidelity, WisdomTree, VanEck, and Invesco, whose ETF applications were re-filed by Cboe last week.

The Impact on Coinbase

As a result of the partnership with BlackRock, Coinbase shares jumped by nearly 12% on July 3rd. Consequently, the stock price for COIN was at $80.98 in after-hours trading on July 4th, as reported by MarketWatch. This significant endorsement led to a substantial rally amongst South African traders and global investors alike, further bolstering the role of crypto exchanges in mainstream finance.

The stock of Coinbase has had a substantial run in 2023, with the recovery of the crypto markets. Since the start of the year, COIN has made an impressive 140% increase, outpacing the overall crypto market’s gain of around 52% over the same period.

The total capitalization of the crypto markets was at $1.26 trillion at the time of writing, marking a 1% increase on the day. Bitcoin also recorded a new local peak but continues to face significant resistance, hovering just over the $31,000 mark.

As South Africa’s cryptocurrency market continues to mature, local traders will watch with interest to see how such international partnerships influence their portfolios and the broader market dynamics.

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