The cryptocurrency industry is reaching a milestone moment as Coinbase is set to join the S&P 500 index. For investors in crypto assets, this move represents Wall Street's acknowledgment of the digital asset space, which may drive more index funds and institutional capital into related stocks and crypto markets.
Cryptocurrency stocks enter the mainstream
According to a press release from S&P Dow Jones Indices, the largest cryptocurrency exchange in the U.S., Coinbase Global, will be included in the S&P 500 index, replacing Discover Financial Services, which is set to be acquired by Capital One Financial. This change will take effect before trading begins on May 19.
Following this news, Coinbase's stock surged 10% in after-hours trading. "This is a sign of the times," said Dan Dolev, senior payments analyst at U.S. investment bank Mizuho, "it means cryptocurrency stocks are entering the mainstream."
Coinbase became the first large cryptocurrency company to be listed on a U.S. exchange four years ago through a direct listing. Despite a series of scandals and bankruptcies in the industry, including the collapse of the FTX exchange, Coinbase's stock has still achieved an increase of about 260% over the past two years.However, the company's stock has performed poorly recently, falling about 17% this year, in stark contrast to Bitcoin's nearly 10% increase. The company's revenue in the first quarter increased by about 24% year-over-year, but it fell about 10% compared to the fourth quarter. Meanwhile, net income dropped 94% to $66 million, primarily due to Coinbase adjusting the valuation of its cryptocurrency holdings to market prices.
David Schassler, head of multi-asset solutions at VanEck Investment Management, stated: "This is a strong signal that digital assets are firmly entering the financial mainstream. It reflects a broader shift in traditional markets recognizing and integrating crypto infrastructure."
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Before the news of being included in the S&P 500 index, Coinbase announced plans to acquire Deribit, the world's largest Bitcoin and Ethereum options exchange, for $2.9 billion, marking one of the most significant acquisitions in the history of the cryptocurrency industry.
"You see all these SEC cases related to cryptocurrencies being quickly dismissed. So, this is a very favorable environment," Dolev mentioned, "there seems to be no urgency to over-regulate, as the current government appears very friendly."
Coinbase's inclusion in the S&P 500 index comes shortly after Bitcoin surpassed the $100,000 mark, indicating that crypto assets are increasingly becoming a part of the U.S. financial system. Major institutions have received regulatory approval to create spot Bitcoin exchange-traded funds, further advancing the mainstreaming process of cryptocurrencies.
As cryptocurrencies continue to merge with traditional finance, market participants will closely watch the long-term impact on the entire industry, especially against the backdrop of Bitcoin hitting historical highs and the Trump administration's friendly stance towards cryptocurrencies.