cryptocurrency exchange coinbase will hold its own initial public offering (ipo). following a successful year in which the exchange generated over $1.8 billion in revenue. bic analyzes the bullish and bearish scenarios of the possible coinbase IPO.
Historically, the market has seen many fundraising events, such as ICOs and IEOS. but the arrival of ipos to the cryptocurrency market is a significant development led by none other than coinbase.
Reading: Will coinbase ipo affect bitcoin
coinbase is one of the largest digital asset exchanges in the industry. There’s a reason analysts and market players alike place so much weight on the coinbase management team’s decision.
the term “coinbase effect”, which means significant increases in asset prices immediately after their listing. this may well become not just the stock’s own shares, but the market as a whole.
first cryptocurrency company to go public
coinbase is the primary gateway for a significant percentage of all crypto activity in the market. the essential legalization of coinbase in the traditional market as a share-listed entity cannot be minimized.
The question of price is now up in the air, as investors, both traditional and crypto, are salivating at the prospect of owning a piece of the major exchange.
Bloomberg claims that shares of coinbase traded between $350 and $375 according to a recent nasdaq private auction. meaning the company’s pre-IPO value is likely to be in the region of $100 billion. making it the most capitalized legal entity in the industry.
See also: Can I Buy Bitcoin With a Credit Card?
coinbase has also decided to go for a direct listing approach. without going through the subscription of investment banks. this is a clear indication of their adherence to the principles of decentralization, disruption, and all the other virtues of the blockchain industry.
focus is also a smart marketing strategy. which will assure customers that the exchange is still in line with its development path that stands out as a “people exchange”.
A direct listing is also a means to attract more capital and liquidity with greater transparency. this is sure to please fans of decentralization and cryptocurrencies. but the company chose not to issue new shares, allowing more investors to buy them.
The approach is also a means of avoiding the associated costs of IPOs, such as underwriter services. the exchange will have a good start with prices. however, the final trading price of its shares is highly dependent on bitcoin and other cryptocurrencies. as these will act as the main funds that investors will contribute to the initial public offering.
why is now the right time to go public?
The last two quarters have been instrumental in determining coinbase management’s decision to go public. With over $7 billion invested in bitcoin during the period and $20 billion siphoned from gold ETFs, the management team has decided not to wait for better times, but to capitalize on the current situation.
this approach is justified. Considering the likes of Morgan Stanley, Goldman Sachs, Blackrock, and others are investing in Bitcoin as a means of saving value. The move made by coinbase is also considered the first important step in establishing a legal and trustworthy bridge between traditional and decentralized financial markets that can attract a large number of investors who have been waiting for such a development as a guarantee in the viability of the market. cryptocurrency market.
Bitcoin’s undulating price has also inflated coinbase’s capital more than 8x in recent months. and market sentiment is hinting at continued growth. As exemplified by companies like Tesla, having Bitcoin on the balance sheet is a surefire way to raise capital and attract investors. thus inflating the capitalization and market value of the company.
the potential impact on the crypto market
coinbase’s initial public offering can have a positive and negative impact on the cryptocurrency market. as his position is that of a cornerstone of the industry. so the swings it may suffer will affect the rest of the superstructure that rests on it.
The positive scenario that can be foreseen with a successful coinbase IPO launch is that the price of major cryptocurrencies will rise as a result of increased investor confidence and the influx of new players willing to participate in the cryptocurrency market.
the defi market will continue to lag. as its services will experience increased demand among users who are rushing to buy digital assets to participate in the trading frenzy that is sure to follow the initial sale of coinbase shares.
However, there is also a negative scenario that can play out as a barrier-building event, rather than a barrier-breaking event. this is demonstrated by the fact that coinbase is a crypto-only company that does not allow fiat trading.
Which would only increase caution among casual investors. another possibility is that which is linked to the uncertainty of participation levels in initial public offerings and the subsequent consequences. As can be seen from the Facebook IPO, the turnout was huge. but the share price crashed the next day as the joy waned.
The same thing could happen to coinbase if the exchange’s arrival on the traditional market turns out to be disappointing among average investors.
The results would be disappointment among crypto audiences and a certain drop in the prices of cryptocurrencies that had been bought in advance in anticipation of a large price increase.
although the coinbase IPO is a milestone for the crypto industry as a whole. There are risks that selling your shares will cause a major price turmoil or lead to a hit that will undermine investor confidence in digital assets. which has been growing lately.
Whatever scenario unfolds, chances are coinbase will be a winner as it also establishes itself in the traditional financial market.