Connect with us

Cryptocurrency

Coinbase IPO: The First Major Cryptocurrency Company to List on US Nasdaq Exchange Today

Published

on

Coinbase Global- Investors King

Coinbase, an American cryptocurrency exchange platform, will today April 14, 2021 be listed on the Nasdaq exchange, making it the first major cryptocurrency to go public in the United States, a milestone that has generated a buzz across the entire cryptocurrency.

When the nine-year-old start-up lists on the Nasdaq exchange on Wednesday, it will become the first major cryptocurrency company to go public in the US, a milestone that has generated excitement in an already buoyant market for digital assets.

The challenge is that few people know how to value the company, which counts on volatile transactional revenues in lightly regulated markets for the vast majority of its business.

“It’s a bit of a Rorschach test for people’s belief in crypto,” said Tom Loverro, a partner at IVP, which valued the company at $1.6bn when it first invested in 2017. Coinbase operates the largest US cryptocurrency exchange and held funds for 56m retail customers at the end of the first quarter, capitalising on the demand for an easy-to-use storage solution in the early days of bitcoin.

The company’s listing comes during a bull run in the price of cryptocurrencies, with bitcoin more than doubling since January to cross the $60,000 barrier. Investors have also flocked to new technologies, bidding up electric vehicle companies and speculative assets such as non-fungible tokens, or NFTs.

The heady combination could create volatility in Coinbase’s shares, even though the company has opted for a direct listing, an alternative to initial public offerings that usually produces modest price changes on the first day of trading. On private exchanges, shares in Coinbase have traded at prices of between $200 and $375 this year, according to the company’s prospectus.

At the top end of that range, Coinbase would have a market capitalisation of almost $74bn, making it more valuable than the parent company of the New York Stock Exchange. Coinbase’s valuation would be roughly $100bn when including options and other kinds of stock-based awards. Such a valuation would be a rich reward for Coinbase, which private investors previously valued at $8bn in 2018.

It would also cement the company’s co-founders, Brian Armstrong and Fred Ehrsam, as multibillionaires, while providing lucrative returns to early investors such as Andreessen Horowitz and Union Square Ventures. Coinbase has grown into the largest US cryptocurrency company by hewing closely to regulators and maintaining a secure service, avoiding the stumbles that have dogged other trading venues.

The company estimated it oversees about 11 per cent of the total cryptocurrency market, with $90bn in assets at the end of last year. Active cryptocurrency users have said that Coinbase takes advantage of its status as a trusted intermediary, charging high fees for basic functions such as holding and trading digital assets. Coinbase takes an average cut of more than 50 basis points per transaction, according to an analysis of the company’s prospectus.

“The question for consumers, and ultimately for institutions, is how much are you willing to pay to safeguard your assets,” Loverro said. “People generally act rationally, and there’s a reason people pay what appears to be a premium to use Coinbase.” Because of the nature of cryptocurrency markets, Coinbase also has few parallels in traditional finance.

It acts as a broker, such as Charles Schwab; holds assets in custody for large clients, similar to State Street; operates an exchange; and sometimes acts as a market maker. Cryptocurrency investors said Coinbase does not usually provide the best liquidity, or trading prices, and its advantage instead rests in the value of its customer accounts.

“We tend to think of Coinbase as an exchange, because they have an order book, but it is not the most important feature,” said Max Boonen, founder of the market maker B2C2. Coinbase dominates an oligopoly of US-based exchanges because of its close relationship to regulators, high trading volumes and relatively secure reputation, said Carol Alexander, a professor of finance at the University of Sussex, who has studied cryptocurrency markets. “Coinbase is certainly leading,” Alexander said.

“As they expand the coins they can offer, that makes it more difficult for the other exchanges to catch up.” The company’s stature also means its finances have closely followed the swings of bitcoin and other cryptocurrencies.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Continue Reading
Comments

Cryptocurrency

Total Market Value of Top Three Stablecoins More than Tripled YTD and Hit $110B

Published

on

Stablecoin - Investors King

In the wake of growing interest in the crypto market, stablecoins or cryptocurrencies linked to an asset have seen their market capitalization surge this year.

According to data presented by MejoresApuestas, the combined market cap of Tether, USD Coin, and Binance USD, as the world’s top three stablecoins, more than tripled since the beginning of 2021 and hit over $110bn this week.

Tether`s Market Cap Jumped Over $68B, a 158% Increase YTD

Unlike other cryptocurrencies, stablecoins are relatively less volatile, and their value is determined differently. For example, the price of Bitcoin mainly follows demand and supply, or how many coins are being mined and how many investors want to buy the crypto. On the other hand, stablecoins are connected to the price of an altogether different asset.

Tether’s USDT, for instance, is connected to the price development of the US dollar. If the US dollar falls in the FX market, so does the USDT. However, the price of the fourth-largest crypto by market cap spiked in 2021.

The CoinMarketCap data revealed that Tether’s market cap jumped by 158% year-to-date, rising from $26.5bn in January to $68.3bn this week. Also, as the world’s most traded cryptocurrency, Tether saw its trading volume increase by 35% last month. In July, the world’s most used stable coin hit $1.48trn in monthly trading volume. Statistics show this figure hit over $2trn in August.

Binance USD Market Cap Soared by 742% YTD, the Biggest Increase Among Top Three Stablecoins

Stablecoins are essential for two areas in digital payments that do not prefer volatility. One of them is the Decentralized Finance or DeFi market that relies on cryptocurrencies for payments and loans.

Also, they are seen as the inspiration for so-called CBDC or Central Bank Digital Currencies, like China’s e-CNY currency or the digital euro, an electronic form of money issued by the Eurosystem.

Although far behind Tether as the world’s leading stablecoin, USD Coin has seen much more significant market cap growth this year. Statistics show the market capitalization of the second-largest stablecoin surged by nearly 400% over the past nine months, reaching $29.2bn this week.

Still, that was nearly twice less compared to Binance USD growth this year. In January, the combined value of all Binance USD coins stood at $1.48bn or almost 18 times less than the leading Tether. However, this figure soared to $12.5bn, showing an impressive 742% growth year-to-date.

Continue Reading

Ethereum

Ethereum Adds Over 38 Million New Addresses in 2021, 22% of All Ever Created

Published

on

Ethereum - Investors King

The Ethereum network has recorded a surge in popularity, with more investors aiming to own part of the second-ranked cryptocurrency. The interest is highlighted by the number of unique new addresses created in 2021 alone.

Data acquired by cryptocurrency trading simulator Crypto Parrot indicates that an average of 149,843 new unique Ethereum addresses has been created daily in 2021 on a year-to-date basis. The highest number of new addresses was created on June 5th at 332,094. So far, in September, a total of 1,389,999 new unique addresses have been created.

Elsewhere, by September 2021, 38,256,193 new Ethereum addresses were created in 2021, accounting for 22.59% of all ETH addresses ever created to date. In general, the cumulative number of Ethereum addresses to be created since inception stands at 169,296,775.

Impact of Ethereum network upgrades on new addresses

Currently, the Ethereum network is undergoing upgrades geared towards transitioning from the proof-of-work protocol to the proof-of-stake system that is energy efficient.

The upgrades play a key role in determining the number of new Ethereum addresses created, and the report takes note of this factor. According to the research report:

“The drop in new addresses comes at a point the Ethereum network upgrade is expected to create a deflation over time as it modifies the auction process. Furthermore, with Ethereum transitioning to the proof-of-stake protocol, the network will likely experience an influx of new users who want to cash in on the staking.”

The new address follows the recent cryptocurrency bull market that saw Ethereum surge in value to a new all-time high price. However, the addresses have plunged in correlation with the general crypto market.

Continue Reading

Bitcoin

MicroStrategy Acquires Additional 5,050 Bitcoins

Published

on

MicroStrategy- Investors King

Business intelligence outfit and corporate Bitcoin (BTC) whale MicroStrategy has increased its BTC ownership with the additional purchase announced on Monday.

MicroStrategy CEO Michael Saylor announced the purchase of 5,050 BTC for about $242.9 million at an average of $48,099 per coin.

In a Form 8-K filing with the United States Securities and Exchange Commission published on Monday, MicroStrategy stated that it had added 8,957 BTC to its corporate Bitcoin treasury in Q3 2021.

As previously reported, MicroStrategy recently bought 3,907 BTC at the cost of about $177 million between July 1 and Aug. 23.

Following the latest Bitcoin acquisition, the company now holds about 114,042 BTC acquired at an aggregate purchase cost of $3.16 billion. Given the current BTC spot price, the company’s Bitcoin holdings are valued at over $5 billion.

According to the Form 8-K document, MicroStrategy’s Bitcoin cost comes down to about $27,713 per BTC, including fees and sundry expenses.

The additional 5,050 BTC purchase is yet another indication of its intention to expand its Bitcoin position. Despite paper losses on its Bitcoin investment in Q2, MicroStrategy has stated its Bitcoin appetite remained unaffected.

Since announcing its maiden BTC purchase back in August 2020, the business intelligence company has bought more Bitcoin becoming the largest corporate holder of the largest crypto by market capitalization among publicly traded firms in the United States.

Saylor has also become a prominent Bitcoin proponent, regularly encouraging other U.S. firms to add BTC to their balance sheets.

Monday’s purchase announcement comes amid a price decline for Bitcoin, with BTC down almost 3% in the last 24-hour trading period.

The total cryptocurrency market capitalization is down more than 4% as token prices slipped on Monday.

Continue Reading




Advertisement
Advertisement
Advertisement

Trending