Key Takeaways:
Coinbase Global Inc. (NASDAQ:COIN) stock jumped 6.5% to $203.82 in Monday trading as the cryptocurrency exchange saw strong momentum ahead of its first-quarter earnings report due May 7.
"The rally is getting a boost from two key drivers: Bitcoin climbing past $80,000, and Tim Scott confirming a bipartisan markup of the CLARITY Act is set for May," a market report from Schaeffer's Investment Research noted.
The legislative push, which aims to establish clearer rules for digital assets, could directly benefit Coinbase's business model. This comes as the stock faces a key test, with its upcoming earnings expected to shed light on the health of the retail crypto trader. The report follows a disappointing update from Robinhood (NASDAQ:HOOD), whose crypto transaction revenue fell 47% year-over-year, a move that briefly dragged Coinbase shares down to $179 in sympathy.
The question for investors is whether crypto trading activity is contracting or rotating to platforms like Coinbase, which reported record institutional derivatives revenue last quarter. The pre-earnings rally is now testing technical resistance at the $213 level, which has capped the stock for two months. Options markets are pricing in a significant move, with a 50-day call/put volume ratio of 2.35 sitting at its highest point in a year, indicating a strong appetite for bullish bets. Further support for a potential breakout comes from the stock's 11.5% of available float held short, creating the possibility of a short squeeze.
This article is for informational purposes only and does not constitute investment advice.
