Shares of Coinbase Global (NASDAQ:COIN), the leading cryptocurrency exchange in the U.S., were gaining for the second day in a row today. News that India is warming up to cryptocurrency with plans to impose a tax on it seemed to give the stock a boost as did Cathie Wood’s ARK Invest, which bought shares of Coinbase yesterday for one of its exchange-traded funds (ETFs).
As of 1:13 p.m. ET on Tuesday, the cryptocurrency stock was up 4.3%.
Cryptocurrencies rose broadly today as investors reacted to India’s announcement that it would launch its own digital currency on April 1 and that it would tax the transfer of virtual assets at a 30% rate. Crypto traders interpreted the news positively, believing that it clarified India’s policy on cryptocurrency, and Binance, the world’s largest cryptocurrency exchange, even said the announcement effectively made crypto legal in India.
As the home of nearly a fifth of the world’s population, India has significant influence on cryptocurrency, and the latest statement should reassure investors that cryptocurrency is here to stay, though the tax rate could discourage trading in India.
Separately, investors likely responded positively to news that Cathie Wood’s ARK Fintech Innovation ETF (NYSEMKT:ARKF) bought nearly 35,000 shares of Coinbase yesterday. Investors closely follow ARK’s moves as Wood is widely admired among growth investors.
While the news out of India is an incrementally positive step for Coinbase, what’s more important is whether interest in crypto continues to grow and if prices rebound from January’s swoon.
There’s a lot of uncertainty on that front. At this point, investors seem to be betting that crypto mania peaked last year as the stock looks cheap at a price-to-earnings ratio of just 15. Analysts expect profits to fall by half this year. Falling prices in most major cryptos won’t help Coinbase. Expect the stock to trend with the prices of the most visible digital currencies, like Bitcoin and Ethereum.
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