Crypto IPO: Trading platform Coinbase goes public in the U.S.

Crypto IPO: Trading platform Coinbase goes public in the U.S.

14. huhtikuuta 2021

The IPO of the crypto trading platform Coinbase is imminent, the US company will be listed on the NASDAQ today (14 April). But even before the start of trading, the company is valued between 90 and 100 billion USD. Coinbase is helped in achieving this valuation through the inclusion of the two highly sought after cryptocurrencies, Bitcoin and Ether, among many other cryptocurrencies which can also be traded on the platform. While Bitcoin continues to gain acceptance, the price is also rising for the second largest cryptocurrency, Ether, from which Coinbase is also benefiting from.

Coinbase benefits from the “Crypto-Hype”

According to the latest business figures, the US crypto trading platform recorded enormous growth in the first quarter of 2021. In order to expand further, the company will therefore go public on the 14th April. Coinbase is not using an investment bank for the IPO and will instead go public through using a “direct listing”. Experts are already predicting that the company will reach a valuation of around 100 billion USD on NASDAQ. This outlook is based primarily on the enormous growth of the first quarter of the current financial year. According to the report, the trading platform gained 13 million new customers in this time period, bringing the number of total verified users to 56 million. While last year’s total revenue was 1.3 billion USD, the company was able to increase its turnover to around 1.8 billion USD in the first quarter of 2021 alone. Net profit also increased significantly in the first quarter of this financial year compared to the whole of 2020. Whilst net profit amounted 322.2 million USD in 2020, it increased to around 750 million USD in the first quarter of 2021. The company does not earn money from fees from the safe storage of cryptocurrencies, but instead from the transactions of customers. Currently Coinbase’s platform has assets of around 223 billion USD, which corresponds to a market share of around 11.3 percent of all cryptocurrencies. In particular, the trading platform is profiting from the increased demand for cryptocurrencies such as Bitcoin and Ether.

Growing acceptance allows Bitcoin to climb further

Bitcoin is the world’s most traded cryptocurrencies and has been increasingly in the public eye for weeks due to its strong rise. New record highs have been reached several times this year alone. Bitcoin, which until now had been regarded as a speculative instrument, has therefore gained more acceptance, which has led to institutional investors also placing their trust in the cryptocurrency. Nonetheless, the criticism is not nonexistent – only recently tech investor Peter Theil made negative comments about Bitcoin. Even though the German born PayPal founder and Facebook investor himself invests in the cryptocurrency and is more or less “pro crypto”, he sees it as a Chinese threat to the US and in particular for the US Dollar. The dominance of the US dollar could crumble if China has built up very large bitcoin holdings. Despite all the criticism, the demand for cryptocurrencies continues to rise and established payment platforms, such as PayPal, now offer Bitcoin as a means of payment. In some countries, like for example in Switzerland, digital money is also available in retail stores. The department store chain Manor, for example, offers Bitcoin in the form of credit cards called Cryptonow, where the customer can choose a voucher card value between CHF 50 and CHF 500. It is up to the respective buyer when they want to redeem the corresponding credit on the Cryptonow card. It can therefore be seen that Bitcoin is increasingly gaining acceptance and popularity and is now considered as a means of payment not only by the Tesla CEO Elon Musk, who was one of the first entrepreneurs globally to accept the use of Bitcoin as a means of payment.

Ether reaches new highs

The world’s second-largest cryptocurrency by market capitalization, Ether, has had an enormously strong price development. Whilst the Ether price was USD 163.94 (as of 12.04.2020) around a year ago, it recently reached its all-time high of USD 2,146.44 (as of 12.04.2021). To compare that with the price development of Bitcoin, Ether shows a stronger percentage rise in the past year. It is a given that as the price of Ether increased, so did the interest in the cryptocurrency. For example the credit card provider Visa decided to rely on Ether in the future and to use the cryptocurrency in a pilot scheme for processing transactions in its payment network. This milestone in the acceptance of Ether is surely a decisive reason for the strong price rise in recent weeks. The main advantage of Ether in comparison to Bitcoin is certainly the versatility of the underlying block chain Ethereum. Unlike Bitcoin, it is suitable for a wide range of applications: for example, it offers the possibility of granting loans, which is why Ethereum is so popular with start-up companies. According to some experts, Ether therefore has the potential to overtake Bitcoin in the coming years. The success of Coinbase’s business model is certainly independent of which of the cryptocurrencies will land on top, as it is possible to trade both of these cryptocurrencies and many others on Coinbase.

Legal notice

This information is in the sole responsibility of the guest author and does not necessarily represent the opinion of Bank Vontobel Europe AG or any other company of the Vontobel Group. The further development of the index or a company as well as its share price depends on a large number of company-, group- and sector-specific as well as economic factors. When forming his investment decision, each investor must take into account the risk of price losses. Please note that investing in these products will not generate ongoing income.

The products are not capitalprotected, in the worst case a total loss of the invested capital is possible. In the event of insolvency of the issuer and the guarantor, the investor bears the risk of a total loss of his investment. In any case, investors should note that past performance and / or analysts' opinions are no adequate indicator of future performance. The performance of the underlyings depends on a variety of economic, entrepreneurial and political factors that should be taken into account in the formation of a market expectation.

11.5.2021 15:00:59

 

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