Shares of Coinbase Global, Inc. (COIN), the digital currency exchange platform, rallied over 20% on Wednesday.
Since the all-time low on May 12, the stock has nearly doubled.
However, the prices of major digital currencies are up much less in recent months.
BTC futures, for example, actually declined yesterday and are up just 24% from their recent low.
So, what exactly is going on here?
Well, it appears something is going on in Washington DC that could positively impact Coinbase and other companies like it going forward…
Regulatory Challenges Wane
As regular readers know, I’m no fan of BTC.
The intense regulatory challenges surrounding the digital currency markets is just one of the reasons I typically stay away from them.
I’ve made the argument that the federal government is not just going to let people do business freely with untraceable transactions…
After all, no government in history has looked favorably on competition with their control over the national currency.
So, what happened yesterday came as a bit of a surprise…
It was reported yesterday that a new bill is being proposed that could bring the digital currency markets under the regulatory authority of the Commodity Futures Trading Commission (CFTC).
The bill would force companies like Coinbase to register with the CFTC, work to prevent market manipulation and take steps to protect consumers.
Bad News is Good News
Sounds like a big headache to me… So, why was the stock up 20% on Wednesday?
While increased regulation has its drawbacks, this bill is actually something the digital currency community should be pleased with.
Remember, investors really only want one thing besides more money… Certainty.
With additional certainty on the regulatory front, investors will be much more likely to invest in digital currency companies.
And that, in turn, resulted in a higher stock price yesterday.
It certainly seems that investors are happy with the proposal, but will they be happy buying BTC?
I’m not so sure…
As I mentioned above, BTC futures are well off of the recent low, but they are far from being in the clear.
The market had a nice bullish push towards the end of last week, but price was halted as it ran right into the declining 50-day moving average (red line).
It has now failed to break above this level for the sixth day in a row, and it is showing no signs of a coming bullish push.
None of the 20% pop in Coinbase shares filtered through to the major digital currencies yesterday, which also speaks volumes to me.
As the regulatory environment evolves, there may come a day when I turn bullish on BTC.
But today is not that day…
Big Buyers Coming Back
Over in the stock market, we are finally starting to see some signs of institutional buying…
This is a big deal for a potential market turnaround and one of the reasons I’ve already called the low in the market.
Institutional investors like pension funds, mutual funds, hedge funds and other large players make massive institutional buys that fly under the radar of most individual investors.
But if you know how to spot those buys in real time, you can potentially follow the big money to big gains.
This is what I focus on inside my premium Stealth Trades research service.
Look, if you haven’t been making money in these markets, it’s time to try something new…
Embrace the surge,
Editor, Stock Surge Daily