Volatile COIN is seeking the stability of regulatory-paradise Ireland
Subscribers to Chart of the Week received this commentary on Sunday, October 22.
Ireland, the “Emerald Isle, ” famous for the freshest Guinness and rolling green hills, has become an idyllic destination not just for tourists, but now for international businesses thanks to its low corporate tax rates. The island roughly the size of state of Indiana sports a 12.5% tax rate, with additional incentives to suggest it’d be a great match for varying sectors to lay down European Union (EU) roots. Its capital city Dublin boasts itself as a student-run hotspot, with people flocking from all over the world to pursue higher-level education at one of its many top-tier universities. This connection to the upcoming workforce combined with idyllic tax rates has created the perfect opportunity for finance, pharmaceutical, medical, tech companies to pursue financial health and longevity. And because of that, they should be on an investors’ radar.
The latest company seeing shamrock green is American crypto-giant Coinbase Global Inc (NASDAQ:COIN), which announced Ireland as its new hub for regulatory operations within the EU. Already carrying a small workforce in the country, growth opportunities came to fruition like a pot of gold to the cryptocurrency exchange as it applied for the Markets in Crypto-Assets (MiCA) regulatory license with the Central Bank of Ireland. Should Coinbase land the license, beginning in 2024 it will have access to operate in all 27 EU states.
Despite regulatory pressures growing at home in the States, COIN has managed to maintain solid long-term gains on the charts, more than doubling in 2023 alone. However, the formerly supportive 80-day moving average (in orange in the chart below) has emerged as overhead pressure, while the shares have also struggled to remain above the trendline connecting COIN’s June bottom to its recent higher lows.
Short sellers seem to be leaning into the stock, with short interest up nearly 4% in the most recent reporting period. This accounts for 12.3% of the stock’s total available float, an ample amount of bearishness that could fuel a short squeeze. The options pits are also abuzz, with 62,000 calls traded by Friday afternoon – double the intraday average amount and volume that checks in at the 84th annual percentile. The majority of contracts are being sold to open, including the October 75 and 76 calls that just expired.
It’s impossible to bring up cryptocurrencies without checking in on Bitcoin (BTC), which coincidentally Friday soared about the $30,000 threshold for the first time since August, after the U.S. Securities and Exchange Commission (SEC) released charges against several crypto executives. The regulatory battle continues to create a grim, beating pulse at the heart of the finance sector, but this recent win is just one of many developments in crypto regulations.
Even further proving its leadership among tax regulation, on Tuesday Oct. 10, Ireland managed to create a fund with outstanding profits from the surplus in U.S. companies that have migrated over to its island. Even more impressive, Ireland has seen its income for corporate tax triple to 22.6 billion euros since 2022 – and unheard of feat post-pandemic. While the expenditures and regulations cross many thresholds in corporate governance and taxation, per Irish Finance Minister Michael McGrath, Ireland has one main goal in mind; “future-proof our economy.”
While Ireland wouldn’t likely be your first thought when you think “crypto” or “pharma” hub, nor would it likely be in the top few countries to come to mind when thinking of financial power. However, it may be exactly the sleeping giant Coinbase Global has decided it is – in fact, if more solid ground is established overseas, it could mean stability for some notoriously volatile sectors.