The crypto exchange, Coinbase, goes public … how it fits into “The Awakening” … one sector of the altcoin world Matt McCall and Charlie Shrem like today
It’s a huge step forward in the “mainstreaming” of the crypto world…
Today, the digital currency exchange, Coinbase, is going public through a direct listing, with the ticker, COIN.
Nasdaq and Goldman Sachs have set a reference price of $250 per share. That puts Coinbase at a valuation of $66.5 billion. This is astonishing growth considering that last September, its valuation was pegged at just $5.8 billion.
Even more jaw-dropping is what analysts suggest Coinbase’s valuation could top later today.
From CNBC:
(Coinbase) could be valued at as much as $100 billion, making it more valuable than major trading venue operators like New York Stock Exchange parent Intercontinental Exchange and Nasdaq.
As I write around lunch, we’re nearing this mark.
From Yahoo! Finance:
Cryptocurrency exchange Coinbase Global Inc was set to be valued at more than $94 billion in a stock market debut on Wednesday that marked another milestone in the development of bitcoin and other digital assets.
At 11:37 a.m. ET, the company’s stock was indicated to open at $360 per share, up 44% from a reference price of $250 per share, making its implied value around three times that of exchange operator Nasdaq.
***Behind Coinbase’s listing is “spectacular” financial growth
For these details, let’s turn to our crypto specialists, Matt McCall and Charlie Shrem, editors of Crypto Investor Network.
For newer Digest readers, Matt has been a bitcoin bull since 2014 – long before it was popular. Appearing on Fox Business Network in July of that year, he told listeners he’d become a believer in this fledgling investment, even as other panelists dismissed him.
Meanwhile, his partner, Charlie Shrem was one of bitcoin’s earliest backers and today is considered one of the most influential people in cryptocurrencies. He’s been mentioned in Fortune… Forbes… CNN… 60 Minutes… TED Talks… Bloomberg… and The Wall Street Journal… to name a few. His story has been featured in numerous Netflix documentaries and best-selling books. And yes, he’s become a bitcoin millionaire many times over thanks to his early involvement.
From their most recent issue of Crypto Investor Network:
The numbers already tell an exciting story.
Coinbase’s first quarter was spectacular. Estimated profits came in between $730 and $800 million, and the exchange broke records for assets under management, revenue, verified users, and active users.
Revenue hit an estimated $1.8 billion, while trading volume surged 276% just from the previous quarter, jumping from $89 billion to $335 billion. Coinbase reported about 56 million verified customers and 6.1 million monthly transacting customers.
Coinbase is already the biggest and best-known exchange, and its Nasdaq listing further legitimizes cryptocurrencies as an asset class.
The result?
Expect even more money coming into the sector.
***This flood of new capital is going to push select altcoins far higher
Matt and Charlie believe that Coinbase’s listing is further evidence of a dynamic they’ve been highlighting for months.
Here they are to explain:
In the future, pretty much everything in the world will be tracked by blockchain.
It’s going to change everything. The way you buy everyday goods and services … buy a home … pay your taxes … maybe even how we vote in the future.
This transformation is already underway, but the truly seismic shift — when the massive profits are made — comes as businesses, consumers, and big-money investors realize what’s going on.
Matt and Charlie refer to this widespread realization as “The Awakening.” And Coinbase’s listing is just its latest manifestation.
In recent months, The Awakening has been driving major inflows into top-tier altcoins, pushing prices sharply higher.
For example, Matt’s and Charlie’s Crypto Investor Network portfolio currently holds five altcoins (it formerly held six, but they sold one for a 104% return).
As I write Wednesday at lunch, the average return of the entire portfolio is 367% – keep in mind, this portfolio has only existed since September 21 of last year. The S&P 500 is up just 25% over the same period.
***As The Awakening continues to develop, expect sector volatility, but keep your focus on the long-term growth story
Bank of America’s most recent fund manager survey finds that the overwhelming majority of respondents believe bitcoin is in a bubble – nearly 75% felt this way.
These managers also suggest bitcoin is the second-most-crowded trade behind tech.
Now, perhaps they’re right – perhaps bitcoin’s value has grown too far, too fast, and it’s due for a significant correction. Similarly, perhaps certain altcoins are due for such a pullback.
But if that’s the case, it’s critical that investors distinguish between a price-correction today and the long-term wealth-generating potential of the crypto world tomorrow.
To help re-orient investors toward a long-term perspective, below, we highlighted content from an essay written by our CEO, Brian Hunt:
…if you want to make big investment returns without working hard or taking much risk, you should learn about an acronym that isn’t on conventional finance websites…
It’s one of the most important acronyms in the world of money and business.
You won’t learn about it in any official study course because it’s something I made up myself.
I call it the BDT.
The Big Dominant Trend.
At any given time, there’s at least one giant “megatrend” shaping world events and human behavior that is so monumental… so impactful… and so powerful…
… that all other trends, controversies, stories, and concerns don’t matter at all when it comes to influencing business trends and stock prices.
The only thing that really matters is the BDT.
The Big Dominant Trend.
You can forget about everything else and focus on it. Nothing else really matters.
Returning to the crypto world, below we look at bitcoin’s chart (a proxy for the crypto sector) since mid-2016.
This is what a Big Dominant Trend looks like.
(In case you have trouble reading the chart, you’re seeing bitcoin climb more than 27,000%.)
Keep in mind, within this 27,000%-gaining period, bitcoin investors suffered a collapse of 80%+…
But as this loss was happening, bitcoin and blockchain were continuing to revolutionize the world and financial markets, creating more and more value.
The result?
Bitcoin became the fastest asset/company to reach a market-cap of $1 trillion…ever. Just 12 years.
Below, we compare that timeframe to other trillion-dollar companies, including Microsoft, Apple, Amazon, and Google. (Google comes in second, at 21 years.)
Looking forward, bitcoin’s price may fall again – and it could be painful for crypto investors. In fact, historically-speaking, we should expect such a decline.
But would such a pullback derail the long-term value of bitcoin, the blockchain, and innovative, disruptive altcoins?
***Turning our focus specifically to altcoins, what’s one area that Matt and Charlie find especially attractive today?
To answer, let’s jump back to their Crypto Investor Network issue:
The DeFi (decentralized finance) ecosystem just hit an incredible $100 billion in total value locked (TVL) for the first time ever, according to DeFiLlama.
DeFi remains one of the hottest trends in cryptos as the technology is embraced and investors look to DeFi coins as a way to increase yield.
Matt and Charlie point toward three of their holdings which are benefitting (one of which is up nearly 1,000%). But they’re quick to refocus on what they believe are the bigger gains ahead.
Back to Matt and Charlie:
…it’s incredible how much upside potential remains.
With $100 billion in TVL, DeFi would rank only about 40th among bank holding companies in terms of total assets.
JP Morgan tops the list with $3.2 trillion in total assets by itself, so you can clearly see a wide-open runway for growth.
If you’re looking for a place to start your own research on DeFi coins, below are the top five DeFi tokens by market capitalization, as listed by CoinMarketCap.
Wrapping up, who knows what Coinbase’s market cap will be by the time you read this. But whatever it is, the more-important point is how today’s listing represents a massive step toward crypto-adoption by the mainstream.
I’ll give Matt and Charlie the final word:
The Awakening continues, and the outlook for altcoins remains bullish.
We think this remains one of the great investment opportunities on the planet.
Have a good evening,
Jeff Remsburg
