Coinbase Global Inc. gains as much as 13% on Tuesday, trading at its highest intraday level since August and extending a rally driven by optimism over the potential US approval of a Bitcoin ETF.
Shares of the biggest US crypto exchange traded at $88.27 a share as of 2:12 p.m. in New York. The stock has more than doubled so far this year amid a broad bounce for cryptocurrency linked stocks despite regulatory challenges from a lawsuit by the US Securities and Exchange Commission.
On Tuesday, CBOE filed for amendments for five Bitcoin ETF applications, confirming that it reached an agreement with Coinbase on surveillance sharing agreements, a move to address concerns by the SEC over market manipulation. The filings previously had said that the exchange was “expecting” to enter into the agreement with Coinbase.
Odds of a spot Bitcoin ETF winning approval in the US “have improved to about 50-50,” Bloomberg Intelligence analyst Eric Balchunas wrote on Tuesday.
“A potential successful application for Bitcoin ETF has been one of the factors driving the stock since mid June,” said Owen Lau, an analyst of Oppenheimer & Co. “If the stock goes up, that will force a short squeeze.”
Coinbase’s stock has drawn interest from short sellers, like many of its cryptocurrency-linked peers. Short interest amounts to about 21% of the stock available for trading, according to data from S3 Partners. That’s been a painful trade this year as shares surged higher — potentially creating about $1.8 billion of paper losses for investors betting against it through Monday’s close, according to data from S3.
Still, Lau cautioned about Coinbase’s stock performance heading into its earnings, as he expects that trading volume will drop 34% in the second quarter from a quarter ago. Tuesday’s stock surge seems to be “mainly driven by technical factor, instead of fundamental factors,” he said in an interview.
Analysts are divided over the stock’s direction from here. While 11 hold buy-equivalent ratings, 13 say hold and 8 say to sell. The average price target on the Street, according to data compiled by Bloomberg, is about $70. That’s below Monday’s closing price of $81.
--With assistance from Carmen Reinicke.