Coinbase shares rise on rebound from meme traders, BlackRock crypto deal

Shares in Coinbase rose on Thursday after the crypto exchange announced a partnership with BlackRock that will allow institutional customers to buy bitcoin.

Coinbase shares were last up 15%. Earlier in the day they jumped as much as around 40%.

Services in the company’s Prime offering will be available to customers of BlackRock’s portfolio management platform for institutional investors, Aladdin, the company said on its blog. Coinbase will provide crypto trading, custody, prime brokerage and reporting capabilities. BlackRock is the largest asset manager in the world with more than 8 trillion dollars under management.

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

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

That interest is a beacon in the night for the crypto community. The industry has suffered a number of hacks and breaches, including attacks on Solana and Nomad this week alone. Crypto has also declined with the broader sell-off in risky assets and is further handicapped by the financial contagion stemming from the Terra collapse in the spring. Many investors argue that institutional adoption is key to increasing the maturity, stability and price of bitcoin and perhaps the broader crypto market.

Coinbase shares have been on a tear lately, and analysts haven’t been sure why. The stock rose 20 percent on Wednesday. Shares were still down nearly 70% for 2022 through Wednesday’s close.

The unusual jump in Coinbase this week may be related to investors who bet against the stock spinning to cover their short positions, a so-called short squeeze. More than 22% of Coinbase’s shares available for trading are sold short, according to FactSet. Then, as the stock goes down, those investors have to buy back the stock to cover their losses, further fueling the gains.

Despite the market rout and the drop in Coinbase’s share price, Citi on Thursday called it the “fizzle before the sizzle” and said it is looking for a stock reversal in the next three months.

“There are some good developments along the way,” analyst Peter Christiansen said in a note to investors, citing potential stablecoin regulation and Ethereum’s long-awaited move to proof-of-stake.

– CNBC’s Yun Li contributed reporting.