Crypto trading app Coinbase went public overnight and boy, oh boy, it made quite the entrance.
Coinbase Global Inc, which is the largest bitcoin exchange in the US, entered the stock exchange on Tuesday under the ticker symbol COIN, finally giving people the option to jump on the crypto bandwagon without ever having to actually buy crypto.
“It could also be a less volatile security than the coins themselves,” Ally Invest president Lule Demmisse told the SMH.
The Nasdaq exchange set a reference price of $US250 when Coinbase made its stock market debut, but according to the Wall St Journal, no trades were executed at that price.
Instead, shares actually opened at $US381 and rose to a whopping $US429.54 within the first few minutes of trading. For a hot second there, this gave the company a market value of over $129 billion.
But by the end of the trading day, the price had calmed back down to $328.28, which is still up 31 per cent on the Nasdaq’s price.
The stock’s value has a high correlation to the price of Bitcoin, which hit a record high of $US64,899.97, before dropping back to $US62,566.55 on Thursday morning.
“When the price of bitcoin goes down, it’s inevitable that Coinbase’s revenue and inherently the price of the stock will decline as well.”
Some experts have also warned that the company could be significantly overvalued, which is obviously worth thinking about before you invest your life savings based on advice from r/WallStBets.
“Look, this is the brokerage industry — it’s not new. Coinbase is not reinventing the wheel here in any way. They are just trading a new product. There is no reason that the New York Stock Exchange or Nasdaq couldn’t also potentially trade crypto.”
The keen interest in the stock is likely a result of people wanting to jump on the crypto hype in what feels like a less risky way. But it is worth noting that the stock exchange is also risky, and you shouldn’t take anything you read in this article as financial advice.
But considering the company just reported a 117 per cent quarter-over-quarter increase in monthly active users, and a net income of $US730-$800 million, it seems there’s more to it than just crypto hype.
However, not everyone is on the crypto bandwagon just yet, but some financial experts expect to see a spike in traders, with Coinbase’s stock market debut predicted to give the crypto world some sort of real-world validity.
“To a lot of people, crypto still seems like a sideshow,” DA Davidson analyst Gil Luria told The Wall St Journal.
“Once you have a $US100-billion-market-cap company that all they do is buy and sell crypto, it’s going to be the epiphany for everyone that this is real.”