Coinbase shines light on banking woes

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Coinbase shines light on banking woes

After the collapse of Silicon Valley Bank, it has emerged as an unlikely benefactor for investors who are fleeing banking stocks.

The largest criptocurrency by market value topped $27,000 over the weekend, the highest level since June. It has gained 60% for the year and has become one of the best performing asset classes of the year, blowing past the S&P 500's 2% gain through Friday.

The upward move may be linked to an unexpected shift in the Federal ReserveFederal Reserve's battle plan to bring down inflation.

A strange element to the rally is that it comes along with recent troubles in the banking sector, particularly in two banks, Silicon Valley Bank and Signature, which are heavy lenders to the criptocurrency industry. The rapid change in Fed expectations Jim Iurrio of TJM Institutional said on the CME Active Trader that seems to be a major tailwind for the digital currency.

As of Sunday, the Fed Watch Tool shows that 38% of the market is expecting the Fed to pause interest rate hikes at Wednesday's meeting, with 62% expecting a smaller 25 basis point hike. Chairman Jerome Powell spoke at the press conference.

Ark Invest founder, CEO and CIO Cathie Wood told The Claman Countdown Friday that it is benefiting from banking fallout and a recent shift for the Fed to pause its rate hike strategy and reverse course.

She said recently when we felt Coinbase was so misunderstood, and when it seemed like the banking regulators were blaming it for what's going on right now, we thought we thought cryptocurrencies could be a beneficiary, a flight to safety.

In the case of Coinbase, it is trying to be as regulatory compliant as possible with this new asset class, while at the same time educating regulators on what this new asset class is all about. Other criptocurrencies are benefiting from this year, includingEthereum, which has advanced over 40% this year.