On Tuesday, CBOE submitted amendments for five Bitcoin ETF applications, signaling its agreement with Coinbase on surveillance sharing agreements. This move aims to address concerns raised by the SEC regarding market manipulation. The previous filings had indicated the exchange’s expectation of entering into an agreement with Coinbase.
The odds of a spot Bitcoin ETF gaining approval in the US have now improved to approximately 50-50, as noted by Bloomberg Intelligence analyst Eric Balchunas.
The potential success of a Bitcoin ETF application has been one of the driving factors behind the recent surge in the stock since mid-June, according to Owen Lau, an analyst at Oppenheimer & Co. He stated, “If the stock continues to rise, it could lead to a short squeeze.”
Coinbase’s stock, like many of its cryptocurrency-related counterparts, has attracted the interest of short sellers. Data from S3 Partners reveals that short interest amounts to around 21% of the available stock for trading. However, this has proven to be a painful trade throughout the year, with shares experiencing a significant surge, potentially resulting in approximately $1.8 billion in paper losses for investors who bet against it until Monday’s market close, according to S3 data.
Nevertheless, Lau cautioned investors about Coinbase’s stock performance leading up to its earnings announcement. He anticipates a 34% drop in trading volume for the second quarter compared to the previous quarter. In an interview, he stated, “Tuesday’s stock surge appears to be mainly driven by technical factors rather than fundamental factors.”
Analysts hold differing opinions regarding the future direction of the stock. While 11 analysts recommend buying, 13 suggest holding, and 8 advise selling. The average price target on Wall Street, based on Bloomberg’s compiled data, is approximately $70, which is lower than Monday’s closing price of $81.