Coinbase shares experienced a remarkable 24% surge on Tuesday, marking their biggest rally since the aftermath of President Donald Trump’s election victory. The spike came as the cryptocurrency exchange was added to the prestigious S&P 500 index, replacing Discover Financial Services. This change is set to take effect before trading begins on Monday.
Stocks that join the S&P 500 often see a boost in value as they are included in the portfolios of funds tracking the benchmark. For Coinbase, this surge is the latest in a series of volatile movements following Trump’s return to the White House after the 2024 election.
The company’s shares skyrocketed by 31% the day after the election, fueled by optimism that the new administration would adopt more crypto-friendly policies. Coinbase and its CEO, Brian Armstrong, played a significant role in the election, supporting pro-crypto candidates financially.
While the beginning of Trump’s term has been favorable to the crypto industry, with deregulation efforts and the establishment of a strategic bitcoin reserve, legislative progress has been slow. Concerns have arisen regarding Trump’s personal involvement in the crypto market through initiatives like meme coins.
Coinbase has experienced its own share of ups and downs, with significant drops in February and March due to market volatility caused by Trump’s tariff announcements. However, with the recent rally, the stock is now up approximately 3.5% for the year.
Since going public in 2021, Coinbase has become a prominent player in the U.S. financial system, especially with the soaring value of bitcoin and the approval of spot bitcoin exchange-traded funds by large institutions. Bitcoin itself reached over $100,000 last week, nearing its all-time high.
To be included in the S&P 500, a company must demonstrate profitability in its latest quarter and over the past four quarters combined. Coinbase reported a net income of $65.6 million and a revenue increase of 24% in the most recent quarter.
Additionally, Coinbase recently announced plans to acquire Dubai-based Deribit, a major crypto derivatives exchange, for $2.9 billion. This deal, the largest in the crypto industry to date, will expand Coinbase’s presence internationally.
In conclusion, Coinbase’s inclusion in the S&P 500 has sparked a significant rally in its shares, reflecting the growing prominence of the crypto industry in the financial market. With continued developments and acquisitions, Coinbase is positioning itself as a key player in the global cryptocurrency landscape.