Coinbase, the big U.S. cryptocurrency exchange, started trading shares on Nasdaq this Wednesday. The valuation of Coinbase is between $50 billion and $100 billion - larger than major stock exchanges such as Nasdaq and Intercontinental Exchange , the parent company of the New York Stock Exchange.
Coinbase's shares are currently priced at $334.76 (-42% lower than open price), but the prospects are huge. As are the prospects for all crypto market assets through the increasing adoption by investors and big money from traditional financial instruments.
Coinbase came to the Nasdaq stock exchange not through a traditional initial public offering (IPO), but a direct listing. It means everyone, from the little guy to big, institutional investors, had a crack at the stock at the same time.
Direct listing, without relying on Wall Street investment banks as underwriters to set the pricing, serves as a cancellation of the traditional approach. But for the crypto-players, deviating from the norm is par for the course.
Why is the Coinbase listing so important? Here are the main reasons:
Coinbase’s debut was hailed as a “watershed” moment for crypto, after years of skepticism from Wall Street giants and global regulators.
The Coinbase listing signifies a larger moment of credibility for the cryptocurrency market. The move could force investors and institutions alike to take a closer look at the entire digital asset space.
COIN listing is the validation that crypto is not a niche market anymore.
And of course, Coinbase is not an ordinary market player. It is a dominant U.S. digital asset exchange and plays a big role in what cryptocurrencies gain acceptance and which ones may be left behind.
Coinbase’s estimated revenue is $1.8 billion for the first quarter of 2021. It’s a ninefold increase from the same period a year earlier, while profits surged from $32 million to between $730 million and $800 million. The number of Coinbase’s monthly transacting users rose to 6.1 million from 2.8 million three months earlier. And will obviously continue to grow after the historical listing.
COIN Listing had a positive impact on the price of Bitcoin at first: BTC /USD broke resistance at $61500 and reached the new all-time high at almost $65000 per 1 BTC! But later, the world’s biggest cryptocurrency plunged as much as 15% just days after reaching a record.
What is the reason of the BTC last drop?
In my opinion, it's more technical, than fundamental. "Buy the rumor, sell the news" is a well-known phenomenon that happens in most markets, particularly financial markets. Some big players may close their buy positions, and wants to add more new one at the lower price. However, here was also speculation that the plunge was related to concerns the U.S. Treasury may crack down on money laundering that’s carried out through digital assets.
Anyway, Coinbase listing is a first direct connection between the capital markets and Bitcoin markets.
While some smaller crypto-based companies trade publicly in the US and overseas, none handles as much crypto as Coinbase, which has some US$223 billion of assets on its platform. That’s why COIN prices is expected to follow the prices of main cryptocurrencies. And could provide a unique opportunity for traditional investors!
Traditional «old-school» stock investors and funds can be still skeptical about BTC . But, after Coinbase listing they have some like as an index on cryptocurrencies. Even it they don’t care about Bitcoin itself, they could buy a Coinbase stock.
Although crypto price can be enticing to investors. But it is a weakness for Coinbase - straight correlation between crypto prices and revenues.
In 2019, when the price of BTC fell, Coinbase lost US$30 million.
And it’s not just its makes Bitcoin risky - it’s also hacking, cyber crime and theft (remember well-known exchange Mt.Gox).
Coinbase has never been hacked. But if Coinbase was ever hacked, if their security was breached, if the client’s assets were ever outright stolen from the wallets or accounts that people have on Coinbase, it would be a disaster for all market.
Trying to distance itself from the risks of Bitcoin , Coinbase started to offer a wider range of products that it can sell to its consumers: retail app, financial account, exchange, custodian , institutional business, commerce merchant payments business - it's all about Coinbase's product.
Current market situation seems positively for cryptocurrencies. Massive adoption is working. But be careful - just because Coinbase is now public, just because Bitcoin’s perception has been changed in the market, it doesn’t mean that BTC never going down again.
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