What Happened?

Shares of blockchain infrastructure company Coinbase (NASDAQ: COIN) jumped 6.3% in the afternoon session after stocks rebounded (Nasdaq +2.0%, S&P 500 +1.5%)

Shares of blockchain infrastructure company Coinbase (NASDAQ:COIN) experienced a 6.3% surge in the afternoon session as stocks rebounded (Nasdaq +2.0%, S&P 500 +1.5%) following a report from The Wall Street Journal.

The report stated that the Trump administration's reciprocal tariffs, set to be announced on April 2, 2025, would be more narrowly targeted than initially feared.

The market reaction indicated that investors took that as a sign the economic impact of the tariffs, particularly on inflation and growth, might not be as bad as they initially feared.

That's a bit of relief, which likely gave businesses and analysts some space to rethink their outlooks. Earlier, the administration had hinted at much broader tariffs that could have hit any country placing duties on U.S. imports, so this shift was likely a welcome surprise for the market.

Separately, stocks linked to digital assets rose as sentiment in the crypto space.

Coinbase's shares are extremely volatile and have had 69 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 5 days ago when the stock gained 6.8% on the news that stocks rebounded to start the session amid continued market volatility after the Federal Open Market Committee kept rates at 4.25% to 4.50% in its March 2025 meeting.

The Jerome Powell-led committee also hinted at two more rate cuts for the year, saying, "Uncertainty around the economy has grown."

The good news is that holding rates steady and signaling two additional cuts this year means no surprises (the market dislikes surprises).

The bad news is that the Fed reduced its outlook growth to 1.7%, down from the previous projection of 2.1% in December. At the same time, the inflation outlook was raised to a 2.8% annual increase for core prices, up from the prior projection of 2.5%. This suggests the Fed sees the macro tilting towards a stagflation scenario, where inflation rises as economic growth slows.

Coinbase is down 21% since the beginning of the year, and at $203.09 per share, it is trading 40.9% below its 52-week high of $343.62 from December 2024. Investors who bought $1,000 worth of Coinbase’s shares at the IPO in April 2021 would now be looking at an investment worth $618.65.

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