Geek Culture
Published in

Geek Culture

The Bear Case for Coinbase

Breaking down the hype of Coinbase with a shot of realism

  • Total Revenue of approximately $1.8 billion
  • Net Income of approximately $730 million to $800 million

Bear Case #1: Frothy Valuation Based On Historic Bull Market

Let’s say $COIN does debut at a $100B market cap.

“You can expect volatility in our financials, given the price cycles of the cryptocurrency industry.” — Brian Armstrong, Coinbase CEO

Source: Coinbase S-1

Coinbase “has little-to-no-chance of meeting the future profit expectations that are baked into its ridiculously high expected valuation of $100 billion.” — New Constructs

Bear Case #2A: Heightened Competition from CEXes

CEX is shorthand crypto jargon for a “centralized exchange”, meaning an exchange that is a private company that custodies users’ funds in order to buy and sell crypto — companies like Coinbase, Binance, Gemini, etc.

“The crypto markets are very young and we expect many more companies to compete for the profits Coinbase enjoys today. As the cryptocurrency market matures, we expect Coinbase’s transaction margins to drop precipitously.” — New Constructs

Bear Case #2B: Competition from TradFi

TradFi is another crypto shorthand for “traditional finance”, i.e., traditional institutions that are looking to issue their own crypto products — like PayPal and Visa for example.

If traditional brokerages begin offering the ability to trade cryptocurrencies, they will most certainly cut down on the unnaturally [high fees] in the immature cryptocurrency market.” — New Constructs

From the institutional investment side, Coinbase is seeing plenty of competitions from the likes of FalconX, Genesis, and BitGo.

Bear Case #2C: Competition from DEX

DEX is short for a “decentralized exchange”, these are exchanges that are not private companies — but rather, they are open-source code that allows for peer-to-peer exchange of assets in a trustless, permissionless manner.

Source: CoinTelegraph

Bear Case #3: A Potential Hack

Again, given that Coinbase’s brand is predicated on trust, this trust could be easily wiped out by a large, damaging hack.




A new tech publication by Start it up (

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store