Coinbase Bitcoin Exchange to Go Public; What does it mean for BTC / USD?
Coinbase Bitcoin exchange will become a public trading company.
The US Securities and Exchange Commission (SEC) released its Coinbase S-1 filing on Thursday, signaling that it had approved the cryptocurrency trading firm's request to list its shares on the Nasdaq seven months after the initial filing. That makes it the first exclusive crypto exchange to achieve boldness.
Rumors of Coinbase exploring public listing opportunities emerged last summer. The company confirmed the news in December 2020, revealing that it had filed an S-1 application with the SEC. Last month, Coinbase announced that it would list Class A shares live.
Meanwhile, Coinbase's S-1 filing publication also publicly discloses its financial performance for the first time. This suggests that the exchange generated $ 3.4 billion in total revenue through 2020, with transaction revenue contributing up to 96 percent of the overall return.
Coinbase earnings were revealed for the first time in public
The company also indicated that it made a net profit of $ 322.3 million in 2020. However, in 2019, it incurred a loss of $ 30.4 million.
Coinbase explains, “We expect our operating costs to increase significantly in the future and may not be able to achieve profitability or achieve positive cash flow from operations on a consistent basis, which could put our business, results of operations and financial conditions to be adversely affected.
Coinbase does not share market prices for its public market debut. However, its shares, which were sold through the Nasdaq Private Market, were priced at $ 373. That leaves the US company with a rough valuation of $ 100 billion.
Institutional Exposure Without Holding Bitcoin
Coinbase's intention to go public has opened a portal for institutional investors to gain exposure in the cryptocurrency market without having to buy cryptocurrency.
Speculators will be able to buy or sell Coinbase shares on the stock market just like any other public company. Their trading success will depend on how the exchange is conducted as a business. Therefore, growth in the cryptocurrency sector, driven by a higher valuation in Bitcoin, Ethereum and other token markets, will determine Coinbase's stock bias.
Chris McAlary, CEO of bitcoin ATM operator CoinCloud, noted:
“If [traditional investors] are more comfortable investing in stocks and putting their money behind companies with cash flow, boards of directors, and a whole lot of traditional infrastructure, they will appreciate the opportunity to get past crypto volatility and invest in Coinbase stocks. "
What does it mean for BTC / USD?
When the SEC finds a company that is suitable for the public, regulators signal a higher demand for its products and services in the future. Cryptocurrency is the central point of the Coinbase service, which means its public listing is dependent on a boom in top digital assets, including Bitcoin and Ethereum.
Most importantly, Coinbase filings come at a time when companies and traditional investment vehicles have exposed their treasury / portfolios to Bitcoin. Their move takes a cue from the potential for cryptocurrencies to act as a hedge against future inflation caused by the Federal Reserve's ultra-dovish policies and the US government's expansionary stimulus policies.
Bitcoin surged more than 1,200 percent from its mid-March low of $ 3,858 amid lower interest rates, unlimited bond purchases, and trillions of dollars worth of direct aid to America, cashing in on depressed bond yields and a depressed US dollar.
Bitcoin surged after the filing of Coinbase's S-1 went public.
And now, with the top Bitcoin exchanges going public, cryptocurrencies are hoping to gain more traction from retail and institutional traders.