Coinbase shares are up 35% since the SEC sued the crypto exchange for allegedly selling unregistered securities

But Coinbase stock has bounced back, rising some 35% after dropping to a low of about $51 on the day that the SEC sued the U.S.’s largest crypto exchange. As of Wednesday morning, shares were trading near $70, and the publicly traded company’s market capitalization has risen to about $16.4 billion.

The resurgence of Coinbase mirrors the broader boomerang of the crypto market in June, riding a Wall Street-fueled fever for Bitcoin that has lifted other cryptocurrencies and injected optimism into an industry that was reeling from a battery of enforcement from the federal government.

“The Coinbase stock has been rallying, the price of Bitcoin has been rallying, and then these two things usually play off of each other,” Omid Malekan, an adjunct professor at Columbia Business School who specializes in the crypto market, told Fortune.

Coinbase stock is now trading higher than before the SEC suit against Binance. Two ways to interpret this (+both can be true)
1) It had sold off in anticipation of the SEC’s “Endgame”
2) The market doesn’t believe Endgame will work. pic.twitter.com/vVC0jnUic6

— Omid Malekan ????????‍♂️ (@malekanoms) June 27, 2023

Specifically, Bitcoin’s resurgence is tied to BlackRock’s recent filing of an application for Bitcoin spot exchange-traded fund, a surprising vote of confidence in the world’s largest cryptocurrency by market capitalization from the U.S.’s largest asset manager.

Shortly after BlackRock’s application became public, the price of Bitcoin soared, notching its highest price in more than a year as a slew of other asset managers filed applications for Bitcoin spot ETFs, potentially opening up the cryptocurrency to trillions in dollars from brokerage accounts and pension funds.

And where Bitcoin goes, so goes the broader market, as the total market capitalization of all cryptocurrencies jumped from just about $1 trillion to now about $1.17 trillion.

Moreover, Malekan pointed out that BlackRock’s ETF filing was not only a vote of confidence in Bitcoin but also Coinbase. Its application listed the publicly traded crypto exchange as the custodian for holding the trust’s underlying Bitcoin.

“For them to continue and list Coinbase as a custodian for their ETF was a strong signal that these SEC allegations are not that big of a deal,” he told Fortune.

Malekan added: “I think the market is telling us sort of like the worst is behind us, as far as U.S. regulatory crackdown is concerned.”