By Coinbase Global Inc. experienced a significant surge in its shares during Tuesday trading following a favorable ruling from a federal appeals court regarding a bitcoin exchange-traded fund. According to a judge from the Washington, D.C., Circuit Court of Appeals, the Securities and Exchange Commission (SEC) was deemed wrong in rejecting Grayscale Investments’ application for a spot bitcoin ETF, as the judge criticized the SEC’s decision as “arbitrary and capricious.”
First Bitcoin ETF Must be Reconsidered by SEC, Court Rules
The ruling has opened up opportunities for numerous other institutions that have applied for spot bitcoin ETFs. Coinbase, being a major player in the cryptocurrency market, holds the potential to partake in these developments. As a result, its shares saw a 13% increase during midday trading on Tuesday.
Bitcoin Jumps After U.S. Court Ruling Clears Way for First Crypto ETF
Although this surge is seen by some analysts as a knee-jerk reaction and short-term covering, it provides momentum to Coinbase in its ongoing legal battle with the SEC regarding alt-coins and staking. This recent development may have a positive impact on Coinbase’s chances of success.
SEC Charges Coinbase for Illegally Operating an Unregistered Securities Exchange
On the other hand, some analysts remain skeptical about the long-term benefits of the bitcoin-ETF. Mizuho analyst Dan Dolev pointed out that the launch of a Bitcoin ETF will further commoditize Bitcoin trading in the U.S. Given that almost 40% of Coinbase’s transaction revenue comes from bitcoin trading, Dolev states that increased competition resulting from a Bitcoin ETF could put pressure on retail take rates and potentially affect Coinbase’s pricing structure.
Dolev currently has an underperform rating on Coinbase shares and a price target of $27.
Here’s Why Coinbase’s New Circle Arrangement Could be a Financial Positive
Apart from Coinbase, other cryptocurrency-related companies also experienced a rally in their share prices. Riot Blockchain Inc. and Marathon Digital Holdings Inc. both saw significant increases, with Riot up 15% and Marathon up 24% on Tuesday.
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