Coinbase IPO: Everything You Need to Know Now
Hide your kids, hide your wife, cryptocurrency is going nuclear.
In the past 24 hours Bitcoin climbed to all-time highs of $63,653 while Ether, the second-largest cryptocurrency by market cap, also set a new record climbing to $2,239.
At the center of it all is one common theme: Coinbase
The world’s most popular cryptocurrency exchange is going public Wednesday through a direct listing that could value the company at as much as $100 billion.
The San Francisco-headquartered exchange could go public at a higher initial valuation than any other U.S. tech company since Facebook. Forbes even dubbed this current bull-run a “crypto gold rush.”
What makes Coinbase special?
Coinbase is the Robinhood of exchanges in the cryptocurrency community. It’s the easiest, most straightforward exchange on the market making it an excellent choice for any beginners trying to invest in cryptocurrency.
Simplicity is also why experienced crypto investors scorn Coinbase, amongst other drawbacks we’ll get into later.
There are 25 different tokens listed on Coinbase making it one of the most diverse places to buy Bitcoin, Ethereum and other altcoins. Furthermore, Coinbase has high liquidity with some labeling it a “cash engine.”
“Understanding Coinbase is an anomaly. It’s become the Facebook or Google of Crypto,” said financial expert Duncan Davidson in an interview with Yahoo Finance. “It’s a perfect direct listing candidate. It doesn’t need to raise money, it’s a cash engine right now.”
What makes Coinbase suck?
While Coinbase is the number one exchange in the world, it has some drawbacks that warrant criticism from cryptocurrency elitists (a.k.a. Reddit dwellers and other internet know-it-alls).
There are three major drawbacks to Coinbase —
Outrageous fees: According to Fox Business, U.S investors face 1.49% for conversions using a bank account or Coinbase’s USD wallet, 3.99% for purchases with a debit card, up to 1.5% of any transaction, and a minimum fee of $0.55 for instant card withdrawals and a fee of $10 for wire transfers.
It’s not surprising that more than 96% of Coinbase’s total revenue comes from these transaction fees. However, they can be avoided almost entirely by switching to Coinbase Pro — a free version of Coinbase with lower fees — which is recommended for more experienced traders.
No Control Over Your Wallet Keys: Coinbase is a centralized exchange, meaning they have complete control over your funds like any other financial institution. This is the antithesis of decentralization. Some investors say you don’t even own any crypto until you take your funds off Coinbase. Although, I’d say the majority of Coinbase’s userbase doesn’t care about this and it won’t affect its valuation.
Last to Get Altcoins: There’s a saying that when an altcoin lands on Coinbase it’s already dead. It’s hyperbolic, but there’s a hint of truth to it. Decentralized exchanges like Uniswap or PancakeSwap are always first to get new tokens. They’ll always be ahead of Coinbase and that might never change.
However, these decentralized exchanges are much more difficult to set up and navigate for beginner crypto investors. Defi poses no real threat to Coinbase.
What is Coinbase’s stock symbol?
Coinbase will trade on the NASDAQ under the ticker COIN.
What does it mean for Binance?
Binance, another one of the most popular crypto exchanges in the world, launched a direct counterattack to Coinbase’s IPO. They’re allowing users to buy stock market shares with a new stock trading service, starting with Tesla.
In other words, beginning this week, you can purchase Tesla tokens on Binance which reflect the price of the company’s stock price.
It’s a mind-blowing, relatively new phenomenon in the crypto world that will continue to catch fire. Moreover, Binance’s stock exchange is zero-commission and may qualify holders for returns including dividends.
This isn’t even mentioning Binance’s native crypto Binance Coin which surged more than 25% in the last 24 hours, reaching an all-time high of $637.44.
Some speculate Coinbase may too release their own cryptocurrency eventually.
Should I Buy Coinbase Stock?
Coinbase will explode tomorrow.
There aren’t many betting against it in the near future. However, Bitcoin and Ethereum are better investments.
Coinbase’s stock will add another layer to the ease of investing in cryptocurrency. It’s the niche they will continue to profit massively from.
We fully expect Facebook investing groups, Reddit, and Discord groups to jump on the bandwagon when it becomes available sometime in the mid-afternoon. Like many recent IPOs and SPACS, however, there will be a massive sell-off in the days ahead.
Buy the rumor sell the news.
That isn’t to say Coinbase isn’t worth investing in at some point. But it’s worth waiting for the bubble to burst before buying in.
Moreover, Bitcoin, Ethereum, and other high-market-cap altcoins will see tremendous upside in the days ahead.
This is not financial advice. All investment strategies and investments involve risk of loss. Nothing contained in this publication should be construed as investment advice.
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