Shares of Coinbase continue to record green candles on the Nasdaq after the exchange reached a surveillance agreement with the CBOE for 5 different spot ETF applications on Bitcoin.
Over the past month the price of COIN has risen 70%, thus totally changing the sentiment of investors who were previously scared due to the SEC’s legal bombardment.
Let’s take a look at all the details together.
Summary
Spot Bitcoin ETFs: surveillance agreement reached with Cboe for Coinbase
Yesterday, cryptocurrency exchange Coinbase reached a surveillance agreement with the “Chicago Board Options Exchange” (CBOE) BZX regarding five different applications to launch a spot Bitcoin ETF.
The company, run by its CEO Brian Armstrong, thus becomes an official partner of hedge funds such as Fidelity, WisdomTree, VanEck, Invesco, and 21Shares that have chosen the CBOE as their official marketplace for applications for a financial product on the leading cryptocurrency.
The amendments submitted mirrored in full what BlackRock and Valkyrie published for their own request for a spot Bitcoin ETF to the rival Nasdaq market, where Coinbase is also named here as the oversight counterparty.
The choice to select the US exchange as the SSA partner for all these ETFs stems from the fact that Coinbase plays a central role in the world of cryptocurrency trading in the United States.
Consider that in May alone, the exchange platform run by Brian Armstrong handled about half of all spot Bitcoin transactions executed in the US.
This news has lifted the spirits of crypto investors, leading COIN shares to perform out of the ordinary.
Should ETFs submitted by asset management companies and hedge funds be approved, Coinbase will play a crucial role in managing exchanges and securing transactions against market manipulation.
Regarding all of this, James Seyffart, analyst at Bloomberg Intelligence said that Nasdaq appears to be ahead of the CBOE for possible approval, given that BlackRock applied first, reaching “an agreement on terms” with Coinbase as early as 8 June.
Mark Yusko, founder of Morgan Creek Capital, agrees with Seyffart: on the “On The Margin” podcast, he said that he also thinks BlackRock has a head start and that the SEC might allow them to launch first.
Not of the same opinion is Matthew Sigel, head of digital asset research at VanEck, who thinks the SEC should approve all the proposals in one fell swoop.
These are his words in one of his tweets:
“Given the nearly identical ETF applications submitted, we believe all issuers should have the same timeline to a bitcoin spot ETF.”
Coinbase stock analysis: rally after several applications for a spot Bitcoin ETF
Coinbase’s success in these “institutional affairs” related to applications for a spot Bitcoin ETF have translated into a sharp price rally for the company’s shares.
COIN, a Nasdaq-listed stock with a capitalization of $20 billion, is currently marking its fifth consecutive weekly green candle in extremely bullish price action.
Since 13 June, the cryptocurrency exchange’s shares have risen in value by about 70%, after losing ground due to the lawsuit filed against it by the SEC.
Indeed, on 6 June, the Securities and Exchange Commission, which is the same federal agency that must now decide whether or not to approve a spot ETF on Bitcoin, had sued Coinbase for violating certain securities laws and failing to comply with registration provisions.
Specifically, the US company allegedly never registered its staking service and allowed its customers to trade with unauthorized securities, having been labeled as securities.
Despite the initial scare, COIN’s prices quickly recovered the declines from those days and are now up 50% since the SEC took legal action.
It seems as if investors are agreeing with the exchange, which, thanks to the support of financial giants such as Blackrock, is winning its personal battle.
The financial world believes that a spot Bitcoin ETF may indeed be approved and that Coinbase is likely to be the counterparty to oversee and prevent manipulation on trading.
In this regard, Eric Balchunas, senior analyst at Bloomberg, believes that there is a 50% chance that a spot ETF on Bitcoin will be approved, and that Grayscale has a 70% chance of winning its personal lawsuit with the SEC.
As positive scenarios such as the ones just mentioned become more and more concrete, and while Coinbase’s stock is going “to the moon,” there are those who are periodically selling the stock on the Nasdaq for millions of dollars.
This is indeed Brian Armstrong, CEO of the exchange platform, who has sold about $5.8 million in COIN in the past week, joining along with 3 other executives who are adopting the same strategy.
An exchange for Institutional clients
Even before partnering with several hedge funds and asset management funds on the issue of a spot ETF on Bitcoin, Coinbase was perceived as an extremely compliant company focused on services for institutional clients.
Now, after it was selected as a supervisory counterparty for the Chicago Board Options Exchange, the relationship has intensified even more.
Unlike other cryptocurrency exchanges, where most of the revenue comes from retail trading, Coinbase has preferred to focus on entities with higher financial reach.
Consider that in Q1 2023, institutional clients accounted for 85% of the volume recorded on the platform for Coinbase, trading $124 billion out of a total of $145 billion.
Retailers were more important to the company’s revenues during 2021, the year of crypto’s bull run, where they accounted for an average of about 30% of volume in each quarter, while still confirming a smaller presence than institutional players.
2022 saw a decrease in the total volume recorded by Coinbase, which obviously posted lower profits than the previous year, in line with all exchanges in the industry.
In any case, despite the decline in the market, the metrics regarding the number of transactions made and new users verified still remained high.
These figures are positive and show that there has always been a base of interest that has not abounded in the industry even during the height of the crypto winter.
The company’s numbers are likely to soar should a spot ETF be approved, be it in the Nasdaq or the CBOE, or at any rate once the cryptocurrency market returns to its bullish phase.
