Shares of crypto exchange Coinbase (COIN) jumped more than 20% on Thursday after the Federal Reserve’s latest interest rate hike and Fed Chair Jerome Powell noted progress in fighting the high rate of inflation.
The U.S.-based exchange also got a boost after it won a dismissal on Wednesday of a proposed class-action lawsuit by customers who claimed Coinbase sold them unregistered securities.
The company’s stock is up more than 100% this year as the crypto industry started recovering from the FTX exchange's collapse. Because Coinbase makes most of its revenue from trading volume, its stock price is highly correlated with bitcoin (BTC), which has been rallying so far this year.
U.K. bank Barclays said in a note on Thursday that Coinbase volumes rose 56% in January from the previous month, and that “volumes are now near levels seen in October before the collapse of FTX, but remain below the average for 2022.”
Most crypto-linked stocks are also rallying, along with the broader equity markets. Business software company MicroStrategy (MSTR), which sometimes acts as a bitcoin proxy because of the large amount of its holdings, rose about 10%, while crypto bank Silvergate Capital (SI) shares soared more than 30% on Thursday.
"We might be getting six more weeks of winter, but it doesn’t seem like we will be seeing an ice age in crypto," said Edward Moya, senior market analyst for foreign exchange market maker Oanda, referring to the latest Groundhog Day forecast. "January was a robust month for crypto and the [Federal Open Market Committee rate] decision helped keep all risky assets going higher," he added.
Meanwhile, crypto miners, which are heavily exposed to the price of bitcoin, are also outperforming. Stocks of miners Marathon Digital (MARA), Riot Platforms (RIOT), Hive Blockchain (HIVE), CleanSpark (CLSK) and Hut 8 (HUT) were among those that climbed more than 10%. Peer Cipher Mining (CIFR) outperformed the group, rising by more than 20%, after reaching all-time high in computing power in January.
The largest cryptocurrency by market capitalization, bitcoin was trading as high as $23,830 on Thursday, while ether (ETH), the native token of the Ethereum blockchain, rose 2% to trade at $1,675 as of press time.
"Bitcoin is riding this risk-on mood from Wall Street, but it might struggle to break above massive resistance from the $25,000 level," Moya noted.
The tech-stocks heavy Nasdaq index rose about 3%, while the S&P 500 was up 1.3% on Thursday.
UPDATE (Feb. 2, 2023 17:43 UTC): Adds analyst comments.