The biggest cryptocurrency exchange in the US, Coinbase Global Inc., is expected to go public via a direct listing tomorrow at a staggering valuation of $100 billion.
It is already worth more than the combined value of the New York Stock Exchange (NYSE) and Nasdaq Stock Market.
Company founders Brian Armstrong and Fred Ehrsam own stakes worth $15 billion and $2 billion respectively.
However, crypto exchange FTX’s proxy market implies Coinbase to be the largest IPO, in history, with a valuation of $150 billion.
While this may seem like an overblown valuation to some, especially those outside the crypto scene, Coinbase justifies these sky-high valuations thanks to its first-quarter profit of $800 million. The San Francisco-based company’s revenue for the first three months was more than double the $1.3 billion recorded for the entire last year.
“Coinbase will be the biggest public pure-play cryptocurrency company, full stop,” said Matt Kennedy, senior IPO market strategist at Renaissance Capital, which runs the Renaissance Capital IPO ETF (IPO).
Coinbase is being priced like a cryptocurrency instead of like a stock. Makes perfect sense if you think about it.
— Mati Greenspan (tweets ≠ financial advice) (@MatiGreenspan) April 12, 2021
Coinbase boasts 56 million verified users, adding about 13k new retail customers a day. With investors hungry for crypto exposure, Coinbase is expected to provide the perfect beta play to its attractive volatility.
“Coinbase is going to blow people’s minds,” said Matt Hougan, CIO at Bitwise Asset Management. “I think it’s going to force traditional finance to wrestle with the phenomenal growth that is taking place in crypto.”
Besides the retail, Coinbase’s institutional customers are also growing at a fast pace; as a matter of fact, in both 2020 and Q1 of 2021, they have so far grown more than the retail. Coinbase was also the one who helped Tesla, MicroStrategy, Meitu, Ruffer Investments, Paul Tudor Jones, and many more.
“That’s going to be the Holy Grail for them if they can hold on to that business because those folks are seen more as holders than traders,” said Julie Chariell, a senior analyst at Bloomberg Intelligence.
While many are bullish on this listing, several are bearish as well, expecting it to mark a local top.
According to QCP Capital, Asia’s crypto traders, this IPO could be a key catalyst event for Bitcoin to run higher, but at the same time, “we’re extremely wary that the IPO on Wednesday could ultimately reveal too much short-term froth in the system and begin the seasonal mid-month decline.”
BTC 5.49%
Bitcoin / USD
BTCUSD
$ 63,300.09
$3,475.17
5.49%
Volume 65 b
Change $3,475.17
Open $63,300.09
Circulating 18.68 m
Market Cap 1.18 t
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The seasonal intra-month pattern has been performing like clockwork this year — a month-end bottom leading into a mid-month top followed by a correction, rinse and repeat.
Meanwhile, spillover from Coinbase hype can be seen in exchange tokens BNB and FTT, soaring 1,330% and 795% YTD respectively.
BNB -3.24%
Binance Coin / USD
BNBUSD
$ 560.84
-$18.17
-3.24%
Volume 10.56 b
Change -$18.17
Open $560.84
Circulating 154.53 m
Market Cap 86.67 b
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ETH 7.72%
Ethereum / USD
ETHUSD
$ 2,294.04
$177.10
7.72%
Volume 25.63 b
Change $177.10
Open $2,294.04
Circulating 115.45 m
Market Cap 264.86 b
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For Binance’s BNB, Binance Smart Chain is working in its favor. “BSC is getting a ton of traction,” Sam Bankman-Fried, CEO of rival FTX exchange, where Binance holds a minority stake, told Bloomberg.
“Worth noting that ETH’s traction was only ever ~50k users or so, though billions of dollars of capital. I don’t think it’ll replace ETH — it’s too centralized — but I do think it put a really serious dent in ETH’s narrative of dominance.”
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