Coinbase’s stock price has historically been correlated to large price swings in the crypto market. That proved true again this week when Coinbase’s shares were hit hard after the prices of many cryptoassets plunged following the collapse of the popular stablecoin project Terra (LUNA -94.73%).
Today, the crypto market is experiencing a bit of a rebound. And Coinbase’s stock is rallying alongside it.
Coinbase’s share price likely also received a boost from the news that widely followed fund manager Cathie Wood was scooping up more of the digital asset exchange operator’s stock during its recent swoon. The founder and CEO of Ark Investment Management bought roughly $30 million worth of Coinbase stock for Ark’s funds on Wednesday.
As one of the world’s largest digital trading platforms and a leading investor in blockchain-focused start-ups, Coinbase’s future is innately tied to the health of the crypto market. Its stock price is thus likely to remain volatile as it’s largely influenced by the gyrations in cryptocurrency prices.
However, the company’s leadership team believes that Coinbase’s long-term success will be more closely tied to the rising adoption of blockchain technology. CEO Brian Armstrong sees the growing usage of cryptocurrency beyond simply for trading purposes as a powerful growth driver. And Wood’s recent stock purchases suggest she shares Armstrong’s perspective on the crypto industry’s future.