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

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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.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Bitcoin

Binance CEO Forecasts Bitcoin Surge Beyond $80,000 on Institutional Inflows

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Binance Chief Executive Officer Richard Teng has set his sights on Bitcoin surging beyond the $80,000 price level on the back of rising institutional investments into crypto-backed exchange-traded funds (ETFs).

Speaking at an event in Bangkok on Sunday, Teng highlighted the significant impact of the launch of Bitcoin ETFs in the United States earlier this year.

He noted that this development has attracted a considerable influx of institutional investors, propelling fresh funds into the cryptocurrency market.

Teng expressed confidence in Bitcoin’s upward trajectory, emphasizing that “we’re just getting started.”

Initially estimating Bitcoin to reach around $80,000 by the end of the year, Teng now believes that the cryptocurrency’s price will surpass this milestone.

He attributed this bullish outlook to a combination of decreasing supply and sustained demand within the market.

However, he cautioned that the rally wouldn’t be without its fluctuations, suggesting that the market’s ups and downs would ultimately benefit its overall health.

Bitcoin has already surged by an impressive 56% this year, reaching a record high of nearly $73,798 last week.

Despite concerns among some investors about a potential bubble, Teng remains optimistic about Bitcoin’s future trajectory.

Teng’s forecast comes in the wake of his appointment as CEO of Binance, succeeding co-founder Changpeng Zhao in November following the company’s $4.3 billion settlement with US authorities.

With relentless inflows into US spot Bitcoin ETFs since their approval in January, Teng expects further institutional adoption in the near term, with more endowments and family offices anticipated to increase their allocations into Bitcoin ETFs.

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Nigeria’s SEC Tightens Grip on Crypto: Raises Crypto Registration Fees

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Nigeria’s Securities and Exchange Commission (SEC) has announced a significant tightening of regulations governing cryptocurrency exchanges.

Under the proposed amendments, the registration fee for crypto exchanges is set to skyrocket from N30 million ($18,620) to N150 million ($93,000), a fivefold increase.

Also, application fees are set to rise from N100,000 ($62) to N300,000 ($186), while processing fees will surge from N300,000 ($186) to 1 million naira ($620).

These fee hikes signal the SEC’s intention to impose stricter oversight on digital asset exchanges and reflect a broader trend of regulatory scrutiny surrounding cryptocurrencies in Nigeria.

The SEC justified these changes by citing the need for clarity and incorporating feedback from industry stakeholders, particularly following engagements with the Central Bank of Nigeria (CBN).

The amendments also include a renaming of the rules and guidelines to “Rules on Digital Assets Issuance, Offering Platforms, Exchange, and Custody,” emphasizing the regulator’s comprehensive approach to regulating the digital asset ecosystem.

This latest development comes amid growing tensions between Nigerian authorities and prominent cryptocurrency platforms.

Just recently, Binance, one of the world’s largest crypto exchanges, found itself embroiled in a dispute with Nigerian authorities over allegations of currency manipulation, resulting in the detention of two Binance executives.

Against the backdrop of Nigeria’s decision to abandon its currency peg and allow the naira to trade freely, the SEC’s move underscores the government’s determination to assert control over the country’s financial landscape, even as it grapples with economic challenges such as inflation and currency devaluation.

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Bitcoin Retreats from Record Highs Amid Debate Over Market Speculation

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The cryptocurrency retreated from its recent record highs, igniting a debate over the speculative fervor gripping global markets.

In Asian trading on Friday, Bitcoin plummeted by as much as 5.6%, shedding its gains from the previous day when it reached a new pinnacle of nearly $73,798.

Despite recovering slightly to trade at $67,300, the retreat has triggered concerns about the sustainability of the crypto bull run.

The moderation in Bitcoin’s surge, alongside a similar trend in other top cryptocurrencies like Ether, BNB, and Solana, reflects a broader shift in investor sentiment.

With both Bitcoin’s ascent and the performance of the top 100 tokens hovering around 60% for the year, market participants are reevaluating their risk appetites amidst a backdrop of escalating inflationary pressures.

In a Bloomberg Television interview, Bank of America Corp.’s Chief Investment Strategist Michael Hartnett sounded alarms, likening the market’s euphoria to the characteristics of a bubble, particularly evident in the technology sector’s “Magnificent Seven” stocks and the soaring highs of cryptocurrencies.

The debate over market speculation is gaining traction on Wall Street, with questions looming about the vulnerability of various asset classes to a potential pullback.

Proponents of Bitcoin point to fundamental supports, such as significant net inflows into US exchange-traded funds and an impending reduction in token supply growth.

However, Bitcoin’s stumble coincided with a surge in US yields and the dollar following a report revealing a spike in producer prices, exacerbating concerns about the Federal Reserve’s ongoing efforts to rein in inflation.

Also, data from Coinglass indicates a rise in caution within the derivatives market, with a notable increase in liquidated bullish crypto wagers and a slump in funding rates for Bitcoin perpetual futures, favored by speculators.

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