Why Coinbase is up almost 40% this week

Shares of Coinbase (NASDAQ:COIN) The price shot up 39.8% this week through Thursday trading, according to data from S&P Global Market Intelligence.

The cryptocurrency online broker rebounded after the election of Donald Trump, which was seen as a positive Bitcoin (CRYPTO:BTC) and also other cryptocurrencies. Since Coinbase’s business is largely based on commissions, which are calculated as a percentage of cryptocurrencies purchased or sold, its financials are highly dependent on cryptocurrency prices.

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Although President Trump was previously a cryptocurrency skeptic, he has recently embraced Bitcoin and digital tokens. Last summer, he spoke at a Bitcoin conference in Nashville, where he promised that the US government would build a strategic Bitcoin reserve, while also declaring the goal of making the US the “crypto capital of the planet.” Additionally, Trump was endorsed by Elon Musk, who was a big supporter of Trump Dogecoin (CRYPTO: DOGE) Cryptocurrency.

So, Trump’s election is believed to be positive for cryptocurrency since he and some of his supporters are generally in favor of cryptocurrencies.

In addition, there are some who consider Trump’s policy of tax cuts and tariffs to be inflationary, and some see Bitcoin as an inflation hedge.

However, this hasn’t really been the case so far, as Bitcoin has been traded more as a risk asset than as an inflation hedge, like gold or other commodities. When inflation skyrocketed in 2022, Bitcoin actually tanked down. However, it is possible that this will change in the future.

A lot of optimism seems to have gone into Coinbase’s stock price because even with Bitcoin at an all-time high, share prices are 43 times behind earnings. Coinbase’s revenue is also extremely unpredictable as it comes from both crypto prices and volatility. Therefore, consider Coinbase a highly speculative bet on rising crypto prices and trading activity in the second Trump administration.

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