Cryptocurrency has hit the mainstream, and it’s making quite a splash.
Coinbase made its debut on the Nasdaq market on Wednesday, with its share price jumping up to $338 per share by 9:30 a.m. at market open.
It’s one of the most impressive debuts in history, with a valuation climbing to $100 billion and a massive buy from Ark Invest CEO Cathie Wood of $245.9 million worth of shares. This raised interest and prompted even more speculation, as the future of crypto begins to merge with mainstream finance.
Coinbase, a platform for buying, selling various cryptocurrencies including Bitcoin, is listed under COIN on the Nasdaq exchange and closed its first day on April 14 at $328.28 per share, giving it a whopping $85.8 billion market worth.
Is Crypto Proving its Worth?
Cryptocurrency is a digital currency in which transactions are verified and records maintained by a decentralized system using cryptography, rather than by a centralized authority.
Cryptocurrency has been outside the realm of mainstream finance and banking for years now, but COIN’s entry onto Nasdaq is being greeted as a pivotal moment for crypto.
Could this be the moment that crypto gets respect on Wall Street? It all depends on who you ask. Some people say Wood’s major buy and many other signs point to a meteoric rise, while others point out that future regulation and strong competition from companies like Kraken, Gemini and Binance could bring down the value of Coinbase.
“They’ve got this solid revenue stream from the fees and the custodial services as well. There’s no real competitor to them on the centralized exchanges because Kraken, Gemini — I don’t think they’re the next ones to go,” said Carol Alexander, a professor at University of Sussex Business School, in expressing her opinion that Coinbase is ahead of the competition.
Alexander has a point.
Coinbase already racked up almost $2 billion in revenue in Q1 of this year, up nine times from a year before and it had profits accelerating from $32 million to $800 million. Its user base is expanding exponentially as well, rising from 2.8 million to 6.1 million in the same period.
With all the transaction fees it can charge per crypto transaction, this is a goldmine for COIN to keep profiting from.
$COIN with $29b in volume on Day One, which I'm pretty sure is an all-time record. $BABA was $25b and $FB was $23b. pic.twitter.com/dSl2lQlODy
— Eric Balchunas (@EricBalchunas) April 14, 2021
Should You Invest in COIN?
This newsletter can’t dispense official investing advice and it’s up to every investor to do their own due diligence. However, there are certainly hopeful signs when it comes to COIN. At this point, some analysts are listing a price target of $500, with the brokerage firm BTIG saying that COIN “is positioned to be a primary beneficiary of the increased adoption of Bitcoin and other digital assets as it continues to scale in the U.S. and internationally.”
As of the end of last month, over 11% of the world’s entire cryptocurrency assets were held on Coinbase, and if the overall value of Bitcoin and other crypto continues to increase then COIN’s value could shoot to the moon.
Bitcoin and crypto are increasingly part of the mainstream conversation, with Tesla buying up $1.5 billion in Bitcoin earlier this year and major banks such as Morgan Stanley introducing crypto investing services for clients.
Bitcoin soared from being worth a few cents when it was launched in 2009 to its current worth of over $62,000 USD. Some people believe Bitcoin may just be a giant bubble, others believe it’s here to stay and will keep growing to $100,000 or beyond.
Either way it’s clear that business as usual is over and cryptocurrency is going to make its voice heard on the world’s biggest stock exchanges.
