Coinbase Global’s (COIN.O) stock has risen from the ashes of last year’s cryptocurrency market conflagration. But the digital exchange’s ascent defies both gravity and logic. Not only does Coinbase’s value hang on factors that are almost impossible to predict, but even in the best case, it’s a mystery why the market would think the firm run by former software engineer Brian Armstrong is worth anything like its current $25 billion.
Shares in Coinbase got a major boost after money management behemoth BlackRock (BLK.N) applied to launch a bitcoin-backed exchange-traded fund this month with Coinbase as its custodian. For an industry still in its infancy, alliances with old-school Wall Street names are a big win. Extra exuberance came from a legal win by Ripple, a creator of digital tokens that, like Coinbase, had been accused by the Securities and Exchange Commission of selling unregistered securities. Coinbase shares are up nearly 54% in July, handily beating the tech-heavy Nasdaq Composite Index (.IXIC), which rose 4%.
