Coinbase (COIN) just secured a much-needed win after the company’s recent regulatory headaches.
As of August 4th, Coinbase is the official crypto provider for institutional clients of Blackrock, the world’s largest asset management firm currently managing a massive $8.5 trillion.
The implications for Coinbase investors, as well as the overall crypto space, are potentially huge.
A Match Made In Heaven
The deal is simple: Coinbase will provide crypto trading, custody, prime brokerage, and reporting capabilities directly to Blackrock’s institutional clients.
Coinbase was selected primarily because of its institutional trading platform, Coinbase Prime. Coinbase Prime is fully equipped with everything an institution could want, including advanced agency trading, custody, prime financing, and staking.
All Blackrock has to do is integrate Coinbase Prime with Blackrock’s investment management platform, Aladdin, and their clients will have direct access to crypto. Not every crypto exchange can offer that ease, and it proved to be a key component for Coinbase in landing this partnership.
For Coinbase, this deal is a desperately needed adrenaline shot. It’s no secret that Coinbase has been taking a lick this year. The hits have been nonstop: crypto prices crashing, trading volume drying up, a failed NFT marketplace, layoffs, an insider trading scandal, and regulators breathing down their necks.
The Blackrock partnership is the first piece of good news Coinbase has had in, no exaggeration, months. Hopefully, they don’t have to wait months for more good news because, despite their flaws, Coinbase does have crypto’s best interest at heart. In many ways, their success is our success.
COIN investors might be even happier about the deal than Coinbase. The company’s stock was recently trading at a measly $53 a share, an ~80% drop from its 2022 opening of $250. Since the announcement, COIN has rallied to $90 a share, a robust 70% gain. There’s still a long way to go before COIN reclaims its all-time high ($368.90), but it’s a step in the right direction.
This deal further confirms for crypto that the institutions aren’t just coming, but are already here. This is good and bad. It’s good because there will be more capital invested in the space. It’s bad because the correlation between the NASDAQ and crypto will likely get tighter, meaning that crypto will continue to trade like a riskier tech stock.
Historically, an announcement like this would have led to a nice pump for the crypto markets. This time though, the markets barely responded. This leads us to one of two conclusions:
- The lack of a pump is a sign that the bear market is still going strong, and it’ll take more than some good news to resume upward price momentum
- The lack of a pump is a sign that the crypto market is maturing and that news like this is no longer strong enough to meaningfully move the market, as investors are now used to and even expect the continued onboarding of institutions
In any case, this partnership is great news for one of Crypto’s flagship companies.