Rising Bitcoin Price Causes Coinbase and MicroStrategy Shares to Plunge

bitcoin price approached the psychological level of $46,000 on January 2, causing shares of Coinbase (COIN) and MicroStrategy (MSTR) to rise 6% and 9%, respectively.

With bitcoin price up 7%, COIN rose to an intraday high of $187.29 and MSTR to $689.35.

The rise in bitcoin price occurred due to anticipation that btc spot exchange-traded funds (ETFs) will be approved imminently. This followed a Reuters report indicating that a decision from the US Securities and Exchange Commission (SEC) could come as early as January 2-3.

The SEC *may* notify issuers as early as Tuesday or Wednesday that they have been authorized to launch spot bitcoin ETFs the following week…

through @Reuters pic.twitter.com/Tj0QWrpfkv

– Nate Geraci (@NateGeraci) December 30, 2023

Why COIN Stock Is Rising Along With bitcoin Price

COIN stock's rise is partly due to exchange Coinbase being listed as multiple btc spot ETF filers for its Shared Surveillance Arrangements (SSA).

Among the companies that will use Coinbase for their SSAs are BlackRock and Fidelity

Gensler was asked in a webinar today about Coinbase being at the center of ETF filings. He was unable to comment on the filings, but was quite negative about crypto exchanges, saying they operate “conflicting services” and have “limited risk monitoring.” Here is the full quote via @The block__ pic.twitter.com/iCVl906GyF

– Eric Balchunas (@EricBalchunas) July 12, 2023

Coinbase's weight as the largest US-based exchange also means that it handles a substantial portion of US-based, US dollar-denominated bitcoin trading.

Arguments in favor of MicroStrategy

For MicroStrategy, the rise comes as the investment firm is among the largest holders of btc and is therefore held by many investors for indirect exposure to bitcoin.

In the last week of 2023, the firm revealed that it had added 14,620 btc to its portfolio between November 30 and December 26 that was worth around $615 million at the time.

MicroStrategy has acquired an additional 14,620 btc for ~$615.7 million at an average price of $42,110 per bitcoin?src=hash&ref_src=twsrc%5Etfw”>#bitcoin. As of 12/26/23, @MicroStrategy now it has 189,150 $btc acquired for ~$5.9 billion at an average price of $31,168 per bitcoin. $MSTR https://t.co/PKfYY59sTW

—Michael Saylor (@saylor) December 27, 2023

The addition brought the company's stash to 189,150 Bitcoins worth around $8.7 billion at current prices. These were purchased at an average price of $31,168, and the investment firm has now recorded more than $2.8 billion in paper profits on the holdings.

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