Shares of Coinbase soared Thursday after the crypto exchange announced a partnership with BlackRock that will allow its institutional clients to buy bitcoin.
Coinbase shares rose 10%. Earlier in the day they jumped as much as about 40%.
Services in the company's Prime offering will be available to clients of BlackRock's portfolio management platform for institutional investors, Aladdin, the company said on its blog. Coinbase will provide crypto trading, custody, prime brokerage and reporting capabilities. BlackRock is the largest asset manager in the world with more than $8 trillion under management.
The ticker COIN also became one of the most mentioned names Thursday on Reddit's WallStreetBets chat room, topping GameStop's popularity in the online forum, according to alternative data provider Quiver Quantitative.
"Our institutional clients are increasingly interested in gaining exposure to digital asset markets and are focused on how to efficiently manage the operational lifecycle of these assets," Joseph Chalom, global head of strategic ecosystem partnerships at BlackRock, said in a statement. The partnership will let them "manage their bitcoin exposures directly in their existing portfolio management and trading workflows."
That interest is a beacon in the night for the crypto community. The industry has suffered a slew of hacks and breaches, including attacks on Solana and Nomad this week alone. Crypto has also gone down with the broader sell-off in risk assets and is further handicapped by the financial contagion that stemmed from the Terra collapse in the spring. Many investors maintain that institutional adoption is key to increasing the maturation, stability and price of bitcoin and perhaps the broader crypto market.
Coinbase shares have been on a tear lately and analysts have not been sure why. The stock jumped 20% on Wednesday. The shares were still down nearly 70% for 2022 through Wednesday's close.
The unusual jump in Coinbase this week could be related to investors who were betting against the stock scrambling to cover their short positions, a so-called short squeeze. More than 22% of Coinbase's shares which are available for trading are sold short, according to FactSet. So as the stock has run, these investors have to buy back the shares to cover their losses, further fueling the gains.
Despite the doom in the market and decline in Coinbase's share price, Citi on Thursday called it the "fizzle before the sizzle" and said it's on the lookout for a stock reversal over the next three months.
"There are some good developments brewing," analyst Peter Christiansen said in a note to investors, citing potential stablecoin regulation and Ethereum's long-awaited transition to proof-of-stake.
— CNBC's Yun Li contributed reporting.