Key Metrics from Coinbase Indicate Bullish Outlook Among Traders Exercising Short-Term Caution

Following the crypto exchange’s inclusion as a “surveillance partner” for multiple spot bitcoin ETFs on Tuesday, Coinbase (COIN) saw a nearly 10% increase, and rising options trading volumes and open interest suggest that bullish sentiment may stick with the stock going forward.

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The company was already announced as a partner for BlackRock’s proposed bitcoin ETF, which supported a recent price increase. The arrangement, which was not included in earlier public spot bitcoin ETF filings, requires a cryptocurrency exchange to provide trading data to law enforcement.

Due to its connections to significant traditional financial firms, some market watchers predicted that Coinbase stock may increase further in the medium term, but they cautioned against making any short-term decisions.

According to a statement from senior market analyst Alex Kuptsikevich of FxPro to CoinDesk, “Coinbase is attracting investor interest due to its history with spot Bitcoin ETFs.” Although this was to be expected, there were still risks, so the first sense of relaxation rapidly gave way to a momentary squeeze.

We can’t rule out the impact of reports from the Ark Innovation fund, which announced the sale of Coinbase shares on Tuesday, Kuptsikevich added, referring to a $12 million COIN sale by Cathie Wood’s ARK Invest. Given that Coinbase has lost out on a substantial percentage of the upside potential of the cryptocurrency market, the range exit gives additional momentum with potential goals for a rapid rebound to $113 and longer-term upside targets approaching $160.

Key Measures

Data reveals that on Tuesday, as the stock completed the day at $89.15, open interest, or the amount of unsettled futures contracts, increased by 4%. With respect to popular cryptocurrencies like bitcoin (BTC) and ether (ETH), this raises the year-to-date gains to 74%.

Rising open interest is an indication of greater wagers on any asset, whether tokens or stocks, as it implies a flow of fresh capital into the financial market, which typically indicates that the current trend is anticipated to continue.

According to data, open interest in COIN-listed options increased 14.6% on Tuesday to 953,393 contracts, far exceeding the 52-week average of 812,568 contracts. Additionally, during the past five days, the put-call ratio dropped by 6.1% to 1.2, indicating that traders have an optimistic outlook for COIN.

Calls are wagers on rising prices, whereas puts are bets against an asset. A declining put-call ratio is viewed as a bullish sign since it indicates that more calls are being purchased than puts.