Shares of Coinbase Global (COIN 3.66%) surged Friday morning, adding as much as 8.1%. As of 12:03 p.m. ET, the stock was still up 5.9%.
A couple of catalysts drove the crypto trading specialist higher, including an upgrade by a Wall Street analyst and news it plans to fund a court battle challenging a U.S. Treasury Department decision.
Daiwa analyst Carlton Lai upgraded Coinbase to buy from outperform (weak buy), while maintaining his price target of $100. This would represent potential upside of 37% compared to the stock's closing price on Thursday.
Indeed, the stock had declined by as much as 36% over the past month, which Lai sees as a buying opportunity. Furthermore, after "years of delay," he views the upcoming debut of Ethereum's (ETH -2.00%) The Merge as "one of the crypto industry's biggest events this year." The transition is scheduled to take place between Sept. 13 and 15, according to Lai.
The Merge is Ethereum's shift from proof-of-work (PoW), the traditional way of validating blockchain transactions developed by Bitcoin, to proof-of-stake (PoS), its long-awaited, more energy-efficient alternative. The move is expected to decrease Ethereum's energy consumption by more than 99%.
In other news, Coinbase announced yesterday that it is funding a lawsuit that will challenge the U.S. Treasury Department decision to sanction Tornado Cash smart contracts. In a blog post on Thursday, CEO Brian Armstrong wrote, "The sanctions exceed Treasury's authority, harm innocent people, remove privacy and security options for crypto users, and stifle innovation."
Armstrong went on to explain, "Tornado Cash is an open source piece of software running on the Ethereum blockchain that preserves privacy by allowing users to deposit assets from one crypto address and withdraw them using a different crypto address."
The upgrade is probably the biggest contributor to the move, but by defending and encouraging innovation in the crypto space, Coinbase is also protecting its own interests.
As such, the prevailing opinion is that anything that's good for crypto is good for Coinbase. As the country's largest cryptocurrency trading platform, there's certainly an element of truth to that view.