As bitcoin, ethereum and other cryptocurrencies get increasing attention from investors, Wall Street and its traditional banks continue to adjust to the shift. Catch up on this week's top stories highlighting the intersection of these old guard and new school areas of finance with this recap.

MICROSTRATEGY ACQUIRE MORE BITCOIN

MicroStrategy (MSTR) announced Tuesday that it purchased approximately 229 bitcoins for $10M in cash, at an average price of approximately $43,663 per bitcoin, inclusive of fees and expenses. As of May 18, the company holds approximately 92,079 bitcoins that were acquired at an aggregate purchase price of $2.251B and an average purchase price of approximately $24,450 per bitcoin, inclusive of fees and expenses. Additionally, amid Wednesday’s bitcoin rout, CEO Michael Saylor said "I'm not selling" via Twitter.

CHINA CRYPTO BAN

Three industry bodies in China have banned financial institutions, including banks and online payments channel operators, from providing services related to cryptocurrency transactions, but have not barred individuals from holding cryptocurrencies, Reuters reported Tuesday. "Recently, crypto currency prices have skyrocketed and plummeted, and speculative trading of cryptocurrency has rebounded, seriously infringing on the safety of people's property and disrupting the normal economic and financial order," the industry bodies stated.

COINBASE INITIATED WITH OUTPERFORM

Wedbush analyst Moshe Katri initiated coverage of Coinbase (COIN) on Wednesday with an Outperform rating and $275 price target. Coinbase is a "one stop shop" platform, enabling roughly 56M retail users, 8,000 institutions, and 134,000 ecosystem partners in over 100 countries to participate in the crypto economy, Katri said.

The analyst likes the company's "first-mover" advantage, saying Coinbase is the "default starting place for new user journeys into the crypto economy." Katri "conservatively" models for 20% revenue and earnings growth for 2022 and 2023. Meanwhile, Piper Sandler analyst Richard Repetto said on Thursday he believes the long term story of Coinbase remains intact despite the recent volatility in bitcoin. The current price of bitcoin remains above all prior quarters besides Q1 of 2021, bitcoin prices have materially corrected and reset higher at least three times prior and trading volumes, both on a coin-specific basis and at Coinbase, are tracking to quarterly records, Repetto said. He kept an Overweight rating on the shares with a $335 price target.

WELLS FARGO CALLS CRYPTO ‘VIABLE INVESTMENT ASSET

In a Wednesday report, Wells Fargo's (WFC) Investment Institute said that it believes cryptocurrencies have evolved into viable investment assets and long-term supply and demand trends support further industry growth, the potential for further compression in price volatility, and a possible role as portfolio diversifiers. The firm views digital assets as an alternative investment for qualified investors through a professionally managed fund, though due to the uniqueness, complexity and continued evolution of these assets, it plans to produce a series of reports with a goal of increasing investor education and understanding of cryptocurrencies.

Several crucial events in 2020 drew increased mainstream usage in transactions and accelerated the maturation of cryptocurrency markets. First, banks received regulatory permission to custody cryptocurrencies, and the investment industry and regulators took additional steps to extend a legal and oversight framework that should help solidify cryptocurrencies as investable assets. The coronavirus pandemic also played a role by fast-tracking the digital economy, as the return to near-zero interest rates sparked inflation fears and interest in alternative payment systems, according to Wells Fargo.

"Cryptocurrencies have gained stability and viability as assets, but the risks lead us to favor investment exposure only for qualified investors, and even then through professionally managed funds," Wells Fargo Investment Institute said. "Such a private placement could serve alongside private equity and debt strategies as the primary means of capturing long-term trends from the emergence of next-era digital technologies and infrastructure. Currently, we offer only private placements, because the Securities and Exchange Commission has not yet approved an exchange-traded fund, although increasing numbers of U.S. financial firms are seeking approval.”

FED TO PUBLISH PAPER ON DIGITAL CURRENCY

Federal Reserve Board Chair Jerome Powell announced Thursday that the Federal Reserve plans to publish this summer a discussion paper that will explore the implications of technology for digital payments, with a particular focus on the possibility of issuing a U.S. central bank digital currency. "As the central bank of the United States, the Federal Reserve is charged with promoting monetary and financial stability and the safety and efficiency of the payment system," Powell said in a video message. "In pursuit of these core functions we have been carefully monitoring and adapting to the technological innovations now transforming the world of payments, finance, and banking."

CRYPTO STOCK PLAYS

Cryptocurrency revenues have been pointed to as reasons to be bullish on Advanced Micro Devices (AMD) and Nvidia (NVDA) in select research. Overstock (OSTK), Ideanomics (IDEX), Riot Blockchain (RIOT), Pareteum (TEUM) and SRAX (SRAX) are other stocks that have been touted, or promoted themselves, as a way to play the crypto theme.

PRICE ACTION

As of time of writing, bitcoin dropped roughly 18% this week at $41,116 in U.S. dollars, according to TradeBlock.