Coinbase's BlackRock pact reinforces crypto status, burns shorts

business-standard.com:

The crypto winter that has dogged Coinbase Global Inc. for nearly nine months might finally be showing signs of thawing.

Shares of the largest US cryptocurrency exchange surged as much as 44% on Thursday, the most intraday since its 2021 direct listing, after announcing a partnership with BlackRock Inc. to help institutional investors manage and trade Bitcoin. The rally puts the stock on track for a third straight day of gains and sets it up for a record weekly rally.

For Coinbase investors, the news is a much-needed signal that its status as a giant in the crypto sector remains rock solid. To be sure, shares are still deeply in the red this year, down more than 60%.

“After this validation, it is possible that Coinbase will be able to partner with more traditional financial industries,” said Owen Lau, an analyst at Oppenheimer & Co. “It shows that even with the size of BlackRock, they are going to partner with a crypto-native company, rather than building their own capabilities.”

The sudden surge added $6 billion in value to the company’s market capitalization, bringing it back above $20 billion for the first time since mid-May. While that’s more than double the size of rival Robinhood Markets Inc., it’s a far cry from the peak valuation near $75 billion from Novmeber, when Bitcoin was trading at a record high.

The company has faced a wave of headwinds in recent months as its trading volumes dwindled amid a plunge in the price of Bitcoin and other digital tokens. It’s also facing a probe from the US Securities and Exchange Commission into whether it improperly lets US customers trade assets that should have been registered as securities.

Short sellers, meanwhile, are taking a beating as the stock extends its sharp