Coinbase (COIN) Pumps 5% on NASDAQ with News of the Clarity Act Gaining Momentum

Coinbase (COIN), a major crypto exchange listed on the NASDAQ stock exchange, jumped 5% to $375 with an average of $372, well above the company’s all-time high of $357 reported in November 2021. The latest US legislation to do the rounds is the Clarity Act, which, according to some pundits, could be spurring on the recent price increases. There could be speculation that the Clarity Act could provide extra momentum for publicly listed crypto companies. Coinbase has a year-to-date performance of 50%, which is a massive profit for investors. Circle, another publicly listed crypto company, recently had an extremely popular IPO, especially for traders interested in the company’s stablecoin USDC.

Andy Heilman, investment advisor, said on X that the price of COIN looked set for a pullback, yet the momentum could see more bullish movements. The investor commented that the stock saw a solid run throughout the trading day. From a technical analysis perspective, the price could be tested by new all-time highs, reaching four-digit figures, and creating an even larger price-to-earnings ratio. Cantonese Cat, a crypto analyst, commented on X that Bollinger Bands indicated that the price was pushing hard against the upper band, which could indicate a pullback to the mean-reversion, but in this instance could indicate further all-time-highs, due to the immense pressure on the upper band. 

Coinbase reported mixed first-quarter results, with a 24% increase in revenue to $2 billion, which was lower than estimated values. The price-to-book ratio looks healthy above 1.5, but the price-to-earnings ratio looks bloated at way above 15. Revenue dropped 10% from the previous quarter, despite showing positive growth. Transaction revenue grew to $1.26 billion, while subscription and services grew by 37%, indicating a positive result for the company’s efforts to diversify cash flows. 

The Senate passed the Genius Act last week, providing stablecoins with extra support by the government, including regulatory certainty and consumer protections. The Genius act also offered support for short-term treasuries and requires large tech companies to report activities to federal authorities to provide consistent client services. COIN’s price pumped by 40% after the Genius Act was passed, reflecting a possible sentiment of traders that the new legislation will benefit stablecoin-involved companies. Gautam Chhugani, a financial analyst, called Coinbase the ‘Amazon of crypto services’. Chhugani priced Coinbase at $510, a rise from $310. COIN recently rose to an all-time high of around $375, a 950% increase from the lows 2022. This performance has partly been attributed to Coinbase diversifying its services into stablecoin-related businesses. 

Fannie Mae and Freddie Mac have been instructed to prepare for stablecoins as a payment method. These entities represent the US housing market. The Genius Act is largely responsible for opening up the doors for traditional investors to engage with stablecoins. The new legislation provides protections and responsibilities for stablecoin businesses and consumers. The added ‘certainty’ created by the new US regulations has finally allowed crypto technologies to enter the public sector. The main form of revenue for Coinbase is derived from transaction fees. However, Coinbase has been diversifying its cash flows and now receives revenue from its assets that back the USDC stablecoin. There seems to be a bullish consensus between technical analysts and pricing experts, with some technical analysts placing COIN at four digits above $1,000. In contrast, pricing experts have a lower target of $500, both vast predictions considering that the price-to-earnings ratio is bloated.