Exclusive BIC’s Crypto Video News Show: Coinbase Update

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In Brief
  • Coinbase was publicly listed on the Nasdaq last week, at one point valued at over $100 billion.

  • During the first day of trading company insiders sold-off $5 billion in stock.

  • Coinbase’s success could trigger greater institutional adoption of crypto, although it may struggle with competition.

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In this episode of the BeInCrypto video news show, host Jessica Walker addresses Coinbase, one week after its historic public offering on the Nasdaq. We will explain the large sell-off that occurred on the first day of trading, and at the bullish and bearish cases for Coinbase going forward.



Owners’ Dump Explained

After the initial push that saw the company valued at over $100 billion, we next saw that insiders sold roughly $5 billion worth of stock. Among them were the CEO Brian Armstrong, Coinbase director Brian Wilson, and investment firm Andreesen Horowitz.

Watch BIC’s Latest Crypto Video News Show Here:

Many interpreted this as a lack of confidence in the company and blamed it for dropping the stock’s price. But this is a regular occurrence around IPOs when early investors can profit from their initial investments.



Source: TradingView

The critical aspect to keep in mind is how much they sold. Armstrong parted with only 1.5% of his holdings, which doesn’t show any lack of confidence in Coinbase’s prospects. 

Bullish Scenario for Coinbase

In blue you have Coinbase’s revenue and in red overlapping is Bitcoin’s price, showing a clear relationship.

Source: Coindesk

It was also popular companies like Grayscale, MicroStrategy, and Tesla that also paved the way for the Coinbase listing. And it’s these institutional investors that Coinbase will try to entice in the coming years.

Institutional investors have seemed reluctant to join in on the crypto rally. However, a public company that offers easier access and exposure to crypto assets is a great way to do it. Should Coinbase win their trust, they would definitely have a head start in this race, and the stock could grow for many years to come.

Bearish Scenario for Coinbase

On the flip side, there is also a bearish scenario, one in which Coinbase falls or even collapses. Actually, there are a few. 

A notable scenario would be a crypto winter which suffocates Coinbase revenue and slows down its progress. When trading volume declines and other exchanges offer lower fees to further coincide with the industry’s growth, Coinbase may struggle to maintain previous results, leading to a decline in their stock price.

But right now, there aren’t too many indications of that, so a different bearish scenario seems more likely. It’s one involving strong competition from multiple sides that are already gearing up to challenge Coinbase’s dominant position. Kraken has already announced they will be issuing a public offering. Additionally, PayPal and Square have made inroads on the crypto market and have announced ambitious plans that could hurt Coinbase.

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Nick is a data scientist who teaches economics and communication in Budapest, Hungary, where he received a BA in Political Science and Economics and an MSc in Business Analytics from CEU. He has been writing about cryptocurrency and blockchain technology since 2018, and is intrigued by its potential economic and political usage. He can best be described as an optimistic center-left skeptic.

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