2021 is shaping up to be a milestone year in the cryptocurrency scene. While Bitcoin continues to discover new price hikes at all, and is one of the leading exchanges in the industry, Coinbase, to be released to the public via a direct listing Ushering in a new era of digital finance.
to me Bloomberg, Coinbase shares traded between $ 350 and $ 375 based on a recent Nasdaq private auction – indicating that the company’s pre-IPO was valued at $ 100 billion.
How Bitcoin Coinbase Grown
As we can see from the chart above, as the bitcoin price has grown, so has the volume of trading Coinbase has seen as well. As the fourth quarter of 2020 brought with it an all-time high of the world’s first cryptocurrency, the volume of trading on the exchange nearly doubled – boosted by an unprecedented level of institutional traders.
In the chart above, we can see how BTC rose throughout the fourth quarter of 2020 through the first quarter of 2021 – growing nearly 1,000 percent compared to the first quarter of 2020.
While this exponential growth has undoubtedly given Coinbase a significant amount of leverage in its IPO plans, could the exchange’s arrival on Wall Street, in turn, increase confidence in the broader cryptocurrency landscape for the average investor?
Coinbase is based on Bitcoin
Coinbase’s decision to go for direct listing instead of underwriting through an investment bank appears to have been taken as a consideration Subtle nod To the company’s established motto since 2013: “Welcome to the future of money,” with the justification of its status as “people exchange”.
When taking a straightforward listing approach, Coinbase has the ability to welcome a greater level of liquidity while also benefiting from a level of transparency that can lead to a more natural way for the stock market to stabilize the company’s share price.
With that being said, the final price of the stock exchange is likely to be heavily influenced by fortunes Cryptocurrencies such as Bitcoin At the time Coinbase was released to the public. There is no doubt that Coinbase will have a more successful opening day for trading if BTC happens to rally at the same time, although the exchange already has a high level of confidence among its user base, which is likely to continue to grow regardless of Bitcoin’s performance.
The growth of the cryptocurrency landscape – regardless of what part Bitcoin will play in the long term – will determine Coinbase’s sustainability. However, for now, the exchange is likely to capitalize on Bitcoin’s short-term success as a way to enter the market with some early momentum.
Restore the impact of Coinbase
The term “Coinbase Effect” has been coined to denote the massive price boosts that cryptocurrencies often receive as an immediate result of being listed on Coinbase. This effect occurs because Coinbase tends to be the primary gateway for cryptocurrencies for many investors who are avoiding more complex and lesser known exchanges or investment methods.
However, in the wake of its IPO, Coinbase could have a very different ‘impact’ in the market, which could cause the coins to rise in value as A major industry figure Collides with the stock market.
As one of the leading exchanges in the ecosystem, a successful launch could lead to the coattail effect which in turn would boost the prices of cryptocurrencies such as Bitcoin, Ether and other mainstays in the market. Coinbase’s influence into the mainstream could lead to increased optimism and validation in DeFi markets.
The significance of a cryptocurrency-based company going public could be far-reaching in terms of investor confidence in an industry that was Somewhat ambiguous The casual investor is shrouded in uncertainty. The successful listing of Coinbase would be a hit in breaking the barriers between the world of cryptocurrencies and the more mainstream investing.
However, Coinbase’s impact could go both ways. On the other hand, if Coinbase’s market access disappointed, it could cause cryptocurrency prices to drop in the immediate aftermath.
Why choose direct listing?
Contrary to what some market commentators had anticipated, Coinbase opted for a direct listing rather than launching an IPO.
In the past, direct listing meant that a company could only offer its existing shares, while an IPO allowed brand new shares to be created. Although the US Securities and Exchange Commission (SEC) recently lifted such restrictions, Coinbase decided against the idea of Create new posts Displayable, which means it will not dilute your existing equity. The direct listing would also mean that the exchange would avoid some of the costly requirements associated with going public – including the use of services like insurance companies.
Significantly, He’ll likely see Coinbase Direct listing as an opportunity for anyone to buy and trade shares in the company – paving the way for new investors to enter the world of cryptocurrencies for the first time.
Although the prospect of a cryptocurrency-based company launching an initial public offering may raise a lot of eyebrows, the truth is that initial public offerings are generally limited to institutional investors who want to buy massive amounts of shares in a single transaction – rather than members. From the public and individual investors whom the exchange aims to inspire in an IPO, and who will only buy small batches of shares at once.
Coinbase’s approach to selecting a straightforward listing shows that there is no preference towards Institutional investors in the IPO stage, Which is potentially welcome news for cryptocurrency enthusiasts who value the freedom to operate in a decentralized market actively rejecting central authorities who own all the cards.
Coinbase looks to honor its roots when released to the public. In this unprecedented move to exchange cryptocurrencies, Coinbase’s next steps may set the tone in what will be a year to remember for the bitcoin world.
This is a guest post by Peter Jobes. The opinions expressed are their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.