What does Coinbase’s Stock Market Listing Mean for the Crypto Industry?

Coinbase is having a direct listing on the Nasdaq stock exchange on April 14th. With a valuation ranging anywhere from $20 billion to $230 billion, there is lots of speculation about how the company will be received by Wall Street. Regardless, the successful listing of Coinbase will lead to greater exposure, mainstream interest, and more realistic valuations for the cryptocurrency industry.

When Coinbase begins trading under the COIN ticker at 9:00am Eastern Time on Wednesday, April 14, the cryptocurrency world will reach a significant milestone: the first cryptocurrency company will have successfully gone public. As the main exchange for United States-based traders, Coinbase has cemented itself as the Robinhood of crypto and is every new investor’s go-to exchange due to their recognition, safety, and offerings. As a result, the valuation for the company has seen incredibly high estimates, sometimes as high as $230 billion. To put this into perspective, AT&T is worth $266 billion, and Nasdaq, the company that runs the stock exchange on which Coinbase will be listed, is worth $25 billion.

Many investors think that the market capitalization of Coinbase is ridiculously high, and they might possibly be right. Recently, tech companies enter the market with high valuations, and then significantly drop after a couple weeks on the market. For example, Uber’s price fell by 8% on it’s first day of trading, and it took Uber nearly a year to reach a price higher than their IPO price. Additionally, Peloton’s stock fell 11% on it’s first day on the Nasdaq. The fact that Coinbase only specializes in cryptocurrencies only helps bolster the argument that their valuation, much like the entire cryptocurrency market, is fueled by baseless speculation, and does not reflect the business in its current state.

On the other hand, some investors are convinced that Coinbase will be the “Amazon of Crypto.” They already have the largest market reach in the United States, and are continuing to gain ground overseas as well. Furthermore, they offer a commerce platform for businesses to accept cryptocurrencies, offer custodial services for institutions interested in holding cryptocurrencies, and have over $200 billion in cryptocurrencies held on their platform. This dominance gives them significant power over the cryptocurrency sector, and as the only publicly-traded company directly dealing in cryptocurrencies, their success correlates to the success of the market as a whole. As they continue to innovate, their dominance will only grow, and investors will see them as a way to invest in cryptocurrencies through a company, which is less risky for Wall Street than Bitcoin itself. 

If Coinbase lives up to their massive valuation expectations, the entire cryptocurrency market will win as a result. With such a high valuation on a centralized exchange, tokens for other centralized exchanges like Binance’s BNB, FTX’s FTT, KuCoin’s KCS, and others will see a surge in interest from investors looking to find the next Coinbase. Moreover, this excitement over exchanges may also help increase the market capitalization of cryptocurrencies as a whole, and investors may become more aware of cryptocurrencies as an investment opportunity. 

On the other hand, if Coinbase drops significantly in value, there could be lasting impacts on the rest of the market. Holders of centralized exchange coins may fear that the companies are overvalued, and sell while they still can, which would lead to a large drop in price. It may even make some believe that the entire cryptocurrency market is overvalued and experiencing a price bubble. If Wall Street is not interested in the first cryptocurrency company, it is easy to assume that they are not interested in Bitcoin, either. 

Regardless of the result of Coinbase’s stock price, there will be positive takeaways for the crypto sector. First, companies and cryptocurrencies will get more realistic valuations based off of Coinbase, which will lead to less volatility in the market. Second, every investor will now have to look at Coinbase, therefore cryptocurrencies, as a viable opportunity. Finally, cryptocurrencies will be respected more by mainstream investors. When a company solely focusing on the crypto markets is able to receive a valuation higher than traditional stock exchanges, people will have to respect the business model.

For the weeks after April 14, the fate of the cryptocurrency market will be in the hands of Coinbase. If all goes to plan and their listing is a success, it will be a day of celebration for cryptocurrency enthusiasts, and signal many more future listings from the likes of Kraken, Binance, and other large names in the cryptocurrency space. However, if the price of COIN falls, the entire market may be facing significant repercussions. One thing is for certain: the day is incredibly significant for everyone in cryptocurrency, whether or not they have ever used Coinbase.

By Lincoln Murr

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