What Happened?

Shares of cryptocurrency exchange Coinbase (NASDAQ:COIN) jumped 5.5% in the morning session after stocks exposed to the cryptocurrency market soared as momentum improved. Notably, Bitcoin, the most popular crypto asset, is set to edge past the $70,000 level, a move that could clear the way for a retest of the all-time high of $73,000 achieved in March 2024. Also, with roughly a week until the U.S. 2024 elections, markets anticipate a potential regulatory review of the crypto space when a new administration is elected. Overall, the sentiment suggests markets are itching for a change. 

Separately, Coinbase revealed a new AI tool for creating AI-powered agents (which could include bots for trading, portfolio management, and even interacting with smart contracts) in less than three minutes. This tool was built on the Coinbase developer platform in collaboration with OpenAI—the creators of ChatGPT—and Replit, a cloud-based software development environment. The announcement highlights the growing effort to lower the adoption barrier for users interested in building AI-driven products. It also provides analysts with more clarity when assessing how Coinbase can participate and benefit from the growing market for artificial intelligence. After the initial pop the shares cooled down to $213.27, up 4.1% from previous close.

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What The Market Is Telling Us

Coinbase’s shares are extremely volatile and have had 76 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The previous big move we wrote about was 5 days ago when the stock dropped 7.3% on the news that a B. Riley analyst initiated coverage on the stock with a neutral rating and a price target of $185 amid valuation concerns and regulatory uncertainty. The price target implied a potential 5% downside from where shares traded before the research was initiated. 

The analyst added "We expect COIN shares to remain range-bound until the election is decided and regulatory clarity is provided or until better idiosyncratic catalysts emerge that provide visibility into more consistent profit growth."

Coinbase is up 35.8% since the beginning of the year, but at $213.27 per share, it is still trading 23.8% below its 52-week high of $279.71 from March 2024. Investors who bought $1,000 worth of Coinbase’s shares at the IPO in April 2021 would now be looking at an investment worth $649.17.

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