Coinbase (NASDAQ:COIN)'s shares breached a nine-week high and peaked at $101.18 in the first week of August following the announcement of its partnership with the world's largest asset manager, BlackRock (NYSE:BLK).
Shares of the cryptocurrency exchange platform operator had been on the rise and reached the nine-week high of $80.81 when the market closed on Aug. 3. The following day, it rose further after the partnership was made public and closed the week at $93.05.
Starting a new trading week yesterday, COIN climbed another 5.4% and settled at $98.02. COIN is now up a phenomenal 81% over the month.
Private Equity-Crypto Fusion
On Aug. 4, Coinbase and BlackRock said they are teaming up to deliver direct cryptocurrency access to institutional clients of Aladdin, the private equity giant's end-to-end investment platform. The collaboration uses Coinbase Prime to provide Aladdin clients with crypto trading, custody, prime brokerage, and reporting capabilities.
Industry participants believe it could set a precedent for other investors and alter how they view the crypto economy, Blockworks.co reported. They added that it indicates that institutions are looking beyond the current widespread volatility.
Bullish On Q2 Figures
The spike in Coinbase's shares was also attributed to analysts' forecast of better-than-expected results for Coinbase's second quarter performance, Cryptoslate reported. However, Wall Street's expectations are a year-over-year decline in earnings.
Since the beginning of 2022, bitcoin has lost more than 50% of its value because of tighter global financial conditions. This dragged Coinbase's shares more than 60% since January, Quartz reported.
The BlackRock collaboration couldn't have come at a better time for Coinbase. However, for short sellers betting against Coinbase, the latest development might have been an unwelcome surprise as it prompted them to close their positions by buying shares, which pushed the prices even higher in what was known as a short-squeeze, The Wall Street Journal reported.
World’s Largest Asset Manager
BlackRock had $8.487 trillion in assets under management as of Jun. 30, and being the world's largest asset manager, any investment move it makes hardly goes unnoticed. Coinbase, with a more traditional client base, could benefit from BlackRock's vote of confidence and the additional exposure to Aladdin's more than 200 institutional users, including insurers, pensions, corporations, banks, and asset managers.
For BlackRock, the partnership is the latest step into its digital-assets ecosystem journey. It seemed unlikely five years ago when its chairman, Larry Fink, called bitcoin an "index of money laundering," Forbes reported. Joseph Chalom, global head of strategic ecosystem partnerships at BlackRock, said,
"This connectivity with Aladdin will allow clients to manage their bitcoin exposures directly in their existing portfolio management and trading workflows for a whole-portfolio view of risk across asset classes."
Furthermore, according to Quartz, the deal is a way for BlackRock to dip into crypto markets with little effort and risk. It noted that working with Coinbase will allow the asset manager to abandon the project if clients lose interest or regulators crack down on crypto trading, which is something it cannot do if it opts to build its crypto capability.
Coinbase is slated to announce its second-quarter results after market close on Aug. 9. During its first-quarter results announcement in May, the company wasn't very bullish on its prospects for the April-June quarter, with expectations of quarter-over-quarter drops in monthly transacting users, total trading volume and subscription and services revenue. Back then, it also kept its full-year 2022 guidance and reaffirmed its commitment to a significant yet prudent investment in the future of crypto.