Coinbase IPO ($COIN) & What This Means For The Stock Market and Crypto Market.
Hello readers! Yesterday was a successful day within the crypto-verse and financial market in general. Bitcoin hit an All-Time-High ($63,857.67) as well as other altcoins. In some cases, some altcoins saw an increase of 20% (EOS, XRP, BCH, and DOGE)! Several other coins took home amazing gains as well.
I started to wonder if there is a correlation between the recent cryptocurrency price increases, and Coinbase launching its IPO today (April 14th, 2021).
---Disclaimer: I am not giving investment advice, I am only making you aware of the recent news regarding cryptocurrency so you can better understand the coin, technology, and the overall effect cryptocurrencies are currently having in the world we live in.---
Coinbase's IPO had Wall Streets' attention. With Coinbase going public, all their records need to be audited and triple-checked that nothing fishy is going on. There are reports that Coinbase had its returns for the first quarter of 2021 to be 1.8 billion dollars and revenue returns of 847% (MarketWatch). The inception of Coinbase was a decade ago and within 10 years, Coinbase has accumulated roughly 56 million users.
To put this user number into perspective for you, the top cryptocurrency trading platforms outside of Coinbase are the following: Binance -13.5 million users & Kraken -4 million users. (cryptimi)
The simplicity of Coinbase appeals to new and intrigued cryptocurrency investors. These 56 million users can now own a piece of their cryptocurrency exchange company. Coinbase will release its IPO ($COIN) on NASDAQ with an estimated stock price of $250.00.
This seems perfect for Coinbase. Bullish investors are expecting the value of the company to reach 100 billion dollars. It can be seen as an overly-confident estimation, but Coinbase has a competitive advantage over its competitors. With Coinbase having more than triple the number of users over its competitors (x3.2), releasing the stock within the public's hands can be seen as a form of legitimacy over Binance and Kraken.
With that being said, Coinbase is not as "user-friendly" as you might think. The transaction fees are astronomical compared to Binance and Kraken. You pay more for the user-friendly interface. Coinbase's fees are 1.50% per transaction. Compare that to Binance (0.10%) and Kraken (0.16%). When you look for your financial sake, these exchanges are more understanding with transaction costs.
As an example, if you have a Coinbase account and have $500 to invest in a cryptocurrency, $7.34 will be your transaction fee. On the other hand, Binance charges you $0.50 and Kraken's fee is $0.80 for the same $500 you are investing.
You can still own Coinbase stock and use other exchanges. That is not forbidden unless you are Jesse Powell or Changpen Zhao. It could be your first step in getting your feet wet within the cryptocurrency market. If you see cryptocurrency as too risky of investment, start with owning a piece of a cryptocurrency exchange.
My hypothesis is the Coinbase IPO will end the day in the red. The only reason I can give for my prediction is the whole uncertainty in the market still (believe it or not). Overall, past the short-term investment and continuing onwards into 2022-2025 Coinbase stock will increase and eventually hit its expected 100 billion dollar value. Just as Bitcoin and other cryptocurrencies gain the public's trust, so will the exchanges that trade said cryptocurrencies.
-Seth Hinkle
Binance vs Kraken: Comparing Exchanges | Cryptimi
Coinbase IPO: Everything you need to know about the ‘watershed moment’ in crypto - MarketWatch