One of the most impressive movers in today’s market (and there are quite a few today) is Coinbase (NASDAQ:COIN). Now up about 20% in afternoon trading, COIN stock is surging on a number of key catalysts.
On the macro front, the rising tide that’s lifting all boats today is widespread anticipation. Specifically, people believe a shift in monetary policy could materialize sooner than expected.
Yesterday’s 25 basis point rate hike from the Federal Reserve — and commentary around further rate hikes — sent a signal to the markets that monetary policy tightening may stop sooner rather than later. For higher-risk assets like cryptocurrencies, this is providing a nice boost. Given Coinbase’s sensitivity to crypto prices, it’s also a key catalyst investors are pricing in today.
Additionally, though, Coinbase is benefiting from the dismissal of a proposed class-action lawsuit against the company yesterday. This lawsuit, which involved numerous customers who alleged Coinbase sold unregistered securities, provided significant overhang for COIN stock.
Let’s dive into what investors should make of today’s move.
COIN Stock Surges on Key Catalysts
There’s certainly a lot to unpack with today’s move in COIN stock. On the macro front, it’s clear that risk-on sentiment is building, with momentum building in more speculative areas of the market. For Coinbase, that’s a great thing. However, the question is now whether this rally can be sustained for any period of time. After all, 2022 was a year of bear market rallies but ultimately lower lows.
That said, since hitting a low of $31.55 per share last year, COIN has been on an absolute tear. This crypto exchange has rallied roughly 150% off its lows as of this writing. While much of this rally has to do with near-term catalysts like the proposed class-action lawsuit dismissal, the stock still clearly has momentum.
For traders looking for a way to gain outsized exposure to this momentum-driven rally, Coinbase is certainly an interesting option here. This is an unprofitable tech company with ties to crypto. Indeed, as far as speculative upside is concerned, that just about sums up the business’ overall allure.
Of course, this rally could easily reverse, given what we saw take place last year. However, considering the incredible momentum COIN stock has shown recently, perhaps there’s something to it right now. Time will tell.
On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
