What Happened?
Shares of blockchain infrastructure company Coinbase (NASDAQ: COIN) fell 2.2% in the afternoon session after the Federal Reserve cut its benchmark interest rate by a quarter-point, while signaling one rate cut in 2026 which was lower than expectations.
The widely anticipated move put the new target range for the federal funds rate at 4% to 4.25%. Policymakers cited a weakening labor market and moderating economic growth as the primary reasons for the cut, signaling a shift in their approach to support the economy. However, they also noted that inflation "has moved up and remains somewhat elevated," creating a conflict as the committee balances its dual mandate of stable prices and full employment.
Investors continued to look for clues on the pace of future rate cuts as the Fed tries to balance a slowing job market with ongoing inflation. Most Fed Committee members have indicated they expect two more cuts for the year.
The Fed's "dot plot" also suggests a much slower pace of cuts than the market currently anticipates. With only one cut implied for 2026 compared to the three that traders priced in, this explained the market pullback after the initial spike that followed the rate cut announcement.
As a reminder, the driver of a stock's value is the sum of its future cash flows discounted back to today. With lower interest rates, investors can apply higher valuations to their stocks. We at StockStory remain cautious, as following the crowd can lead to adverse outcomes. During times like this, it's best to own high-quality, cash-flowing companies that can weather the ups and downs of the market.
The shares closed the day at $320.50, down 2.3% from previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Coinbase? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Coinbase’s shares are extremely volatile and have had 61 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 8 days ago when the stock gained 2.6% after renewed optimism as a wave of positive regulatory developments in the U.S. suggested a more favorable environment for the digital asset market.
The move was primarily driven by a joint statement from the SEC and CFTC, which proposed allowing regulated U.S. exchanges to trade spot crypto assets directly. This potential policy shift could significantly reduce regulatory burdens for companies like Coinbase. Further bolstering sentiment, U.S. lawmakers are reportedly advancing the Responsible Financial Innovation Act of 2025 to clarify oversight and cooperation between the two agencies.
In a separate development, Congress also proposed a bill directing the Treasury to explore creating a Strategic Bitcoin Reserve. These crypto-friendly signals coincided with a broader market rally, as the total cryptocurrency market capitalization increased by 2%, crossing the $4 trillion mark.
Coinbase is up 24.4% since the beginning of the year, but at $320 per share, it is still trading 23.8% below its 52-week high of $419.78 from July 2025. Investors who bought $1,000 worth of Coinbase’s shares at the IPO in April 2021 would now be looking at an investment worth $974.78.
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