With Bitcoin at $60,000 it’s likely Coinbase’s IPO this week will stimulate more institutional buying of crypto than ever before.
Revenue climbed more than nine-fold from a year earlier to an estimated $1.8 billion, spurred by a surge in the price of bitcoin. Coinbase, Binance, Kraken and Bakkt are certainly beneficiaries of Bitcoin’s rise due to a huge cash savings for those that surfed the Fed stimulated markets in 2020.
That wealth this expands even more in crypto. Forget DeFi, Coinbase thus centralizes crypto wealth in the hands of mega whales. Meanwhile younger investors who have retreated from the stock market may put their winnings back into crypto.
The listing of Coinbase could cause a gold-rush in Crypto investing in the Spring of 2021 as the next major movement of pent-up liquidity.
Coinbase said it has 56 million verified users and that could increase a lot in 2021. Celebrities like Elon Musk and Cathie Wood have boosted Bitcoin in 2020 as have companies that profit from it such as Square, PayPal and others who have put their a portion of their corporate cash in Bitcoin like MicroStrategy and Tesla.
Coinbase is poised to become the latest tech company to hit the market with a massive valuation, capitalizing on continued growth in the sector despite broader economic struggles caused by the coronavirus pandemic. It’s valuation is also likely to be completely ridiculous as compared with its size and future competition. Basically another distortion in the market brought on by endless Fed QE and debt-based stimulus.
This gives “crypto” a surge, but a rather unsustainable surge in user activity. Bitcoin above $80,000 will certainly be in a speculative bubble. Kraken and others are likely to follow in Coinbase’s footsteps to use the liquidity to grow even faster. These exchanges could also be acquired, for instance by the likes of Facebook, ByteDance or other companies.
Trading on the private market has valued the company at $68 billion, a number that swells to about $100 billion when factoring in a fully-diluted share count. In P/E terms this is all very far-fetched. Coinbase is unique because its valuation increase mirrors the trajectory of the top cryptocurrencies. Bitcoin is up about 700% in the past year, while ethereum has soared by more than 1,300%. This creates a FOMO environment for crypto in the immediate future.
The company offers an exchange to make it easy for the average investor to buy cryptocurrency, as well as a digital wallet to store it in. It doesn’t stop there. For more-advanced users, Coinbase Pro offers advanced charts and more-complicated trading options. However Coinbase has notoriously high fees and there are better options for crypto enthusiasts with much more innovative companies that have no plans to go IPO like Binance. Coinbase is essentially a crypto company dressed in Silicon Valley clothes, even with the usual controversies.
While bitcoin ETFs exist in the U.S., they do not directly own bitcoin. They own portfolios of stocks deemed to have exposure to blockchain technology. With the arrival of Bitcoin ETFs in Canada, the U.S. is a bit behind in crypto regulation. Meanwhile China’s digital Yuan based on blockchain technology will create a new paradigm in finance. China has also been accused of using Bitcoin (which is possible to manipulate) to de-stabilize the U.S. dollar at a time where it’s vulnerable with inflation.
At the Last Futurist we think the anticipation of Coinbase’s IPO creates a better on-ramp for Bakkt’s stock, which is more likely to become a convenient digital wallet for crypto with real-world interactions. Square is another company with huge Bitcoin exposure via its Cash app. Buying Bitcoin above $50,000 is likely not such a wise idea and the same could be said for Ether above $1,000. Coinbase’s asking price will also be way too steep compared to its resting place in the future ecosystem of crypto.
A bitcoin ETF that owns bitcoin is a long-awaited dream of crypto investors because it will greatly expand the class of potential owners. However the crypto investors have already increased due to Bitcoin’s exceptional rise in 2020, along with Millennials and GenZ further investing part of their inheritances in it.
Kraken is considering going public via direct listing in 2022 after bitcoin’s rally led to record trading volumes. Coinbase will register nearly 115 million shares of Class A common stock, which will trade under ticker symbol COIN. While Coinbase is heavily reliant today on attracting users who store and trade the two major cryptocurrencies, the company is betting on the development of a larger ecosystem of crypto-related assets in the coming years. But is Coinbase worth $100 Billion? That’s just Silicon Valley scamming its way to more access to liquidity like usual.
Coinbase is nothing more than a brokerage and an exchange with a shiny interface and high fees for crypto noobs. The potential $100 billion valuation of Coinbase Global ahead of the cryptocurrency exchange’s trading debut is “ridiculously high,” said New Constructs CEO David Trainer and many other analysts. Coinbase is the not the Unicorn of anything remotely that represents decentralization of the spirit of Bitcoin, in any way. Given the behavior of Jack Dorsey, Elon Musk, Cathie Wood and others, it’s hard to see how Bitcoin is not being manipulated by Billionaires (and likely China) in its incredible rise.
The Bitcoin pump is likely a worse manipulation than the EV Bubble and Tesla’s rise in 2020. None of it is based on fundamentals and that’s a problem and an easy way to rob the inheritance money of Millennials. Coinbase is set for a direct listing on the Nasdaq exchange on April 14. Happy crypto hunting!