Coinbase’s shares soared 24% on news it joined the S&P 500, marking a historic inclusion for the cryptocurrency sector into the prestigious stock market index.
The inclusion signals mainstream acceptance of the cryptocurrency industry, potentially leading to significant market and financial impacts, as billions in buying pressure are anticipated from index-based funds.
Coinbase Makes History with S&P 500 Entry
The inclusion of Coinbase in the S&P 500 is a milestone, as it’s the first crypto-native company to achieve this. Shares surged between 16-25% following the announcement, highlighting the event’s significance for the industry.
CEO Brian Armstrong has been a pro-cryptocurrency advocate, significantly supporting related initiatives. Analysts predict buying pressure of $16 billion due to passive and active investment demands from index trackers and funds.
Analysts Predict $16 Billion Buying Pressure
Bernstein and other analysts view the inclusion as significant, attributing a price target increase for Coinbase shares. The company’s stock has rebounded, now trading flat for the year after previous declines.
Coinbase is the first and only crypto company to be included in the S&P 500. – Gautam Chhugani, Analyst, Bernstein
The market anticipates substantial buying activity, with passive funds needing to purchase approximately 36 million shares. This follows historical trends where similar additions outperformed post-announcement by an average of 7.2% the next day.
Added to Financial Sector: Capital Market Shift
Previous S&P 500 additions in the financial sector resulted in notable share price increases, similar to Coinbase’s recent surge. This event reflects a broader trend towards acceptance of cryptocurrency within mainstream financial markets.
Experts from Kanalcoin view this as a transformative moment, suggesting wider implications for cryptocurrency exposure among institutional investors. An ongoing shift in capital market dynamics could follow, given growing crypto integration.
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