Shares of Coinbase (COIN 0.50%) rocketed 39.8% this week through Thursday trading, according to data from S&P Global Market Intelligence.

The cryptocurrency online broker rallied following the election of Donald Trump, which was thought to be a positive for Bitcoin (BTC 1.78%) and other cryptocurrencies as well. Since Coinbase’s business is largely predicated on commissions charged as a percentage of crypto bought or sold, its financials are highly leveraged to cryptocurrency prices.

Trump embraced crypto this summer

Though a former skeptic on cryptocurrencies, President Trump recently embraced Bitcoin and digital tokens. This past summer, he spoke at a Bitcoin conference in Nashville, where he vowed to have the U.S. government build a strategic Bitcoin reserve, while stating the goal of making the U.S. the “crypto capital of the planet.” Moreover, Trump was endorsed by Elon Musk, who has been a big booster of the Dogecoin (DOGE 4.42%) cryptocurrency.

So, the election of Trump is thought to be a positive for crypto, given that he and some of his supporters are generally pro-cryptocurrency.

Additionally, there are some who think Trump’s policies of tax cuts and tariffs are inflationary, and some regard Bitcoin as an inflation hedge.

That hasn’t really been the case thus far, as Bitcoin has tended to trade more like a risk asset than an inflation hedge, such as gold or other commodities. When inflation spiked in 2022, Bitcoin actually went down. However, it’s possible that could change in the future.

Coinbase looks expensive, but it’s hard to tell

There appears to be a lot of optimism baked into Coinbase’s share price, with shares going for 43 times trailing earnings, even with Bitcoin at all-time highs. Coinbase’s earnings are also extremely unpredictable, as they are an output of both crypto prices and volatility. Therefore, consider Coinbase as a highly speculative bet on increased crypto prices and trading activity in the second Trump administration.