Coinbase shares jumps 7% as investors bet on crypto after Fed cuts rates

The recent climb in the share price of Coinbase represents a significant comeback since last September when the stock dropped as low as $76 in the lead up to crypto fraudster Sam Bankman-Fried’s criminal trial. 

Despite tumbling 13% in June and weathering its worst week of the year in August, Coinbase has made a recovery due, in part, to surging transaction revenue. In the first quarter of 2024, Coinbase reported $1.2 million in transaction revenue, almost equivalent to the entire year of 2023. Trading volume is up significantly on the platform from last year, signaling a resurgence of users. 

It remains unclear if Coinbase will be able to maintain these gains but, as of Friday, shares remain around $169. 

A large portion of Coinbase’s revenue comes from trading fees, making it often a good indicator of the crypto economy as a whole. Microstrategy, a cybersecurity firm whose CEO pivoted to make the firm the largest corporate holder of Bitcoin, also saw its shares gain this week, increasing by about 8% and holding steady. Meanwhile, the price of Bitcoin has risen around 10% in recent days, briefly reaching $64,000 early Friday morning. 

All of this comes one day after Jerome Powell, the head of the Federal Reserve, announced long-awaited cuts to benchmark interest rates. The decision to cut rates by half a percentage point exceeded some analysts’ expectations who assumed the Fed would opt for a more modest cut.