Why Coinbase and Crypto Jumped on Tuesday

What happened

The crypto market turned positive on Tuesday as investors flocked back to riskier assets. Earnings were relatively positive Monday after the market closed and Tuesday morning, pushing riskier assets higher today.

Coinbase Global (COIN 7.22%) was a big mover, jumping as much as 11% and trading 10.6% higher at 1:30 p.m. ET. After volatile trading over the past 24 hours, Bitcoin (BTC 0.38%) is up 2.7% since the stock exchange opened, Ethereum (ETH 1.38%) jumped 7.6%, and Solana (SUN 0.06%) was up 6.6 percent.

So what

The biggest news in crypto was the $200 million hack of the Nomad bridge, which is a cross-chain bridge that allows users to send crypto to different blockchains. Bridges have been a weak spot for crypto and within hours there was a free-for-all attack on the bridge by multiple users.

Robinhood Markets was also fined $30 million in its crypto division for violations of anti-money laundering and cybersecurity regulations by the New York State Department of Financial Services.

There was some “risk of” trading going on in crypto, but I think the most meaningful move was made by Coinbase. The company announced a staking option for Coinbase Prime members, who are typically institutional investors. This can provide investors with passive income on the fees paid to transact on the blockchain.

Coinbase also supports bet for Solana, Polka dot, Cosmos, Tezos, Celo, and other cryptocurrencies. This could be a great new revenue stream for Coinbase, and with security becoming a more important factor for investors, this platform could generate significant revenue for the company.

What now

The sharp rise this morning appears to be little more than market volatility. Investors were happy with earnings reports and jumped back into riskier assets, which cryptocurrencies definitely fall into.

More important news for Coinbase will come out next week when the company reports earnings. Investors will want to see how trading levels hold up, but remember that revenue streams from betting, cloud services and other products will be an important part of the company’s future. I wouldn’t expect a profit in the quarter, but making a plan to survive until the market turns may be enough for investors.

I also think the additional tools companies like Coinbase bring to market will help expand the crypto ecosystem. Investors should want to see more activity from developers, and Coinbase is enabling that development. Long-term days like this are bullish for the industry, although volatility can wipe out today’s gains pretty quickly.