For many investors, The commercial debut of Coinbase Global Inc. next week will be the $ 2 trillion cryptocurrency market entry.
And for those who are already passionate about Bitcoin, the arrival of the largest cryptocurrency exchange in the United States on the Nasdaq stock market could be what it takes to liquidate portfolios ravaged by the notorious volatility of the class of ‘assets.
There are other stocks linked to the bits and bytes of the various block strings. Elon Musk’s Tesla Inc. and Michael Saylor’s MicroStrategy Inc. has remarkably added billions worth of Bitcoin to its treasures. But with the public listing of Coinbase, investors will be able to choose a heritage linked to cryptocurrencies, that is, so hope va – is less likely to suffer persistent boom and bust cycles.
“For a cryptocurrency investor who also buys stocks, it has the ability to diversify risks, as there is a very profitable trading platform that trades elsewhere (stock market) the flows of buyers and sellers may be less correlated than many cryptocurrency prices, ”wrote Greg Foss, a veteran credit trader, Bitcoin investor and CFO of Validus Power Corp., in an email response to questions.
Coinbase plans to make itself public through a direct listing in which it will not raise any new capital, it said in an S-1 presentation. Direct listing allows current shareholders to trade their shares without a closing period that is typical in an initial public offering. It was valued approximately $ 90 billion in its last week of trading on the Nasdaq private market, Bloomberg News reported.
However, as volume and price tend to go hand in hand, Coinbase’s transaction revenues, its largest segment, could continue to be susceptible to fluctuations in the cryptocurrency market.
“In a traditional securities portfolio, it gives exposure to an exchange platform that generates trading commissions in cryptography,” Foss wrote. “These fees increase with volumes and volumes typically increase with prices, so there’s a beta trade.”
Coinbase said Tuesday it expects to file a first quarter a profit of $ 730 million to $ 800 million, more than double what it earned throughout 2020. The largest quarter of the exchange comes amid rising cryptocurrency prices. The Bloomberg Galaxy Crypto Index, which tracks Bitcoin, Ether and six other cryptocurrencies, has advanced more than 100% in each of the past two quarters.
Coinbase market capitalization projections against listed stock exchanges
Coinbase may be of more interest to investors. The exchange could provide a diversified and accessible investment in the space, where there is a proliferation of cryptocurrency tokens and few passive vehicles to spread bets, according to Gil Luria, head of institutional research at DA Davidson & Co.
“Coinbase will win regardless of which cryptocurrency asset is the winner, and its revenue is more tied to trading volumes, which are often less volatile than asset values,” Luria wrote in an email.
But investors who want to add some stability to their cryptocurrency portfolios may want to exercise patience.
Kevin Kelly, global head of macro strategy at research firm Delphi Digital, warns that those looking for a lower volatility investment may want to leave the first week of Coinbase trading.
“I expect to see a lot of volatility next week once COIN starts trading, but I finally think we’ll see it more in line with the direction of the broader crypto market,” Kelly wrote in an email. “However, I see it as a lower beta game in the continued expansion of crypto with a lower risk of declining cryptographic asset prices; in other words, COIN is more agnostic than cryptographic asset prices and may be a attractive opportunity for investors who want to expose themselves to the continued adoption of crypto without assuming similar levels of price volatility. “