Another Watershed Moment for Crypto?
As Bitcoin records another spectacular week, it appears that the line between traditional markets and digital assets is becoming increasingly blurred
More and more institutional investors are increasingly looking to take a slice out of the Bitcoin pie, while an unprecedented number of retail traders are adding cryptocurrencies to their portfolios.
Now it appears that cryptocurrencies are becoming a more significant part of traditional markets, particularly with the latest announcement from Coinbase Global Inc.
Early last week, Coinbase announced that its plans to launch an IPO are officially in the pipeline. Being one of the first and most established cryptocurrency exchanges, this move has been long-awaited by investors and crypto enthusiasts alike. The announcement comes at a time when Bitcoin has been making daily headlines, sparking major interest among investors.
What to expect from Coinbase’s IPO
Coinbase’s quarterly earnings reports have been consistently profitable, showing rapid growth between 2019 and 2020. Last year, the company’s net income increased to $127.5 million while its revenue grew to $1.28 billion.
Quarterly earnings reports can change quite drastically from one quarter to the next, with the company’s revenues in 2020 ranging from $186.4 million to $585.1 million. Most of Coinbase’s revenue is generated from transaction costs, while a substantial portion comes from its subscription and services model.
Overall, the company’s performance shows an impressive 139% growth throughout 2020 alone, making this an ideal time for Coinbase to proceed with its direct listing.
Through a direct listing, a company can bypass a number of steps undertaken on the traditional IPO route. Instead of pricing and selling new capital, the company simply lists its shares, which can then be traded instantly. Direct listings are only possible for companies that don’t require the initial raising of new capital, and Coinbase definitely fits the bill.
If everything goes to plan, Coinbase will be the first company to be directly listed on the Nasdaq Stock Exchange under ‘COIN’. Other successful direct listings by technology companies such as Spotify, Slack and Asana have taken place, but these were all listed on the New York Stock Exchange. This move shows that the gap between cryptocurrencies and traditional markets is getting smaller as the act of trading digital assets becomes more common and accepted.
What will be the impact on the future of cryptocurrencies?
While rumours about Coinbase’s IPO have been circulating since last year, the company has now made it official. The only unknown factor is when, exactly, this will occur. Still, the prospect of the IPO is bound to be a significant milestone for cryptocurrencies. The inclusion of a crypto exchange company on the Nasdaq would further strengthen the reputation of cryptocurrencies as a tradable asset. Furthermore, this direct listing will provide an opportunity to indirectly invest in cryptocurrencies, and we may even see other crypto-related firms following in Coinbase’s footsteps.
With Bitcoin already booming past $50,000 and altcoins also having their moment to shine, the potential for cryptocurrencies in the future seems limitless. Traders can benefit from trading Cryptos and CFDs on stocks and indices, such as the NAS100, over at CedarFX.
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CoinJournal Press Team, @KhareemSudlow