Coinbase opens the road to IPO, with a valuation of more than ten billion US dollars will accelerate the reshuffle of the crypto exchange landscape
On December 17, 2020, Coinbase, the largest cryptocurrency exchange in the United States, issued a statement on its official blog stating that it had submitted a draft S-1 registration statement to the Securities and Exchange Commission (SEC). The S-1 form is expected to take effect after the SEC completes the review process, and it depends on market and other conditions.
The announcement of the submission of a listing application after Bitcoin reached an all-time high and rose to $23,000 on December 17, undoubtedly became a milestone in the process of the crypto industry becoming mainstream.
Coinbase has obvious advantages in listing
Coinbase stated that it has submitted a confidentiality application to the SEC. For this reason, Coinbase has not disclosed any details related to the IPO, nor has the SEC official website disclosed any relevant information. Our reporter learned that from October 2018 to July 2020, Coinbase has been preparing for listing. Earlier news said that Coinbase is considering a direct listing instead of an initial public offering (IPO), and both IPO and direct listing require the submission of S-1 form. In other words, if the SEC rejects Coinbase’s IPO request, Coinbase can seek a direct listing, that is, without creating any new shares, only selling existing shares without the participation of underwriters.
In the latest research report released on December 8, Messari stated that in terms of IPO candidates that the U.S. crypto industry will be able to conduct, there are four companies worthy of attention. The crypto exchanges Coinbase, Kraken, BlockFi and Grayscale’s parent company, well-known Investment agency DCG. Coinbase’s stock is valued at US$7-12 billion in the secondary market and received US$8 billion in investment in the most recent financing.
Messari analyzed in the report that Coinbase has four listed advantages: First, the brand has a large influence. Coinbase is the world’s first exchange and the largest exchange in the United States. It has a good reputation for fraud prevention and safe custody; second, the company’s profit model. In the past two years, Coinbase has intensified its global layout, crazy listings, stable coins, and development of institutional users. Coinbase’s profit model is the same as PayPal, transaction fees, consumer payment fees, and value-added services that have been vigorously developed this year; third, Coinbase has become a major participant in custody. Grayscale Trust, which is the same parent company as Coinbase, purchases cryptocurrencies from the Coinbase Exchange and then custody on Coinbase. Coinbase is an indispensable part of the entire process of Grayscale. On the same day that Coinbase announced its submission for listing, Grayscale’s official Twitter announced that as of December 17, the total scale of Grayscale asset management was $15.3 billion. Fourth, Coinbase is the “darling” of regulators.
It is worth noting that Coinbase has repeatedly adjusted its layout strategy in a few years. In addition to the continuous growth of its business scale, it has also brought a lot of negative effects. In November of this year, under the latest guidance of the US Commodity Futures Trading Commission (CFTC), Coinbase closed margin trading, and in September and October this year, Coinbase experienced a wave of resignations and repeated collective appeals.
As the largest crypto exchange in the United States, once Coinbase is successfully listed, it will become a milestone in the crypto industry. From a global perspective, if Coinbase can successfully go public through an IPO, a valuation of more than ten billion US dollars may bring a lot of pressure on the crypto exchange giants Huobi, OKEx, Binance and BitMEX, and the crypto exchange structure may face Reshuffle, and this IPO test will also provide experience for other crypto exchanges to list in the United States.
Determined investment in uncertain times
In recent years, the rapid rise of cryptocurrency has also attracted Wall Street and mainstream financial giants one after another, which has injected a boost to the development of the crypto industry and formed a virtuous circle. As of 4 pm on December 18, BTC’s quotation on mainstream exchanges has stabilized at around 23,000 US dollars, and BTC’s earnings performance once again surprised the world. The rise of BTC this year is inseparable from the entry of institutions. Even Bridgewater Fund Ray Dalio stated that “I think that Bitcoin have over the last ten years established themselves as interesting gold-like asset alternatives. ) “Such an evaluation.
Bitcoin can rise to the present level. It is inseparable from the promotion of the entry of traditional financial institutions, but it also has the value support of its own network development. However, if you look at this rise alone, you cannot ignore the evening of November 16. Important event—Fed meeting on interest rates.
Miles believes that there is certainly no suspense about the outcome of the interest rate discussion. The market is more concerned about Powell’s speech at the press conference, which reflects the central bank’s expectations for the future economy. The press conference announced that the Federal Reserve will continue to purchase at least $120 billion in bonds every month until substantial further progress is achieved in achieving the maximum employment and price stability goals. While the current global epidemic is still full of uncertainties, Powell and his Fed committee members still release dovish voices to the market. So after Powell’s speech, the US dollar weakened again in the currency market, non-US currency pairs rose sharply, and dollar-denominated assets such as Bitcoin and gold continued to rise again.
“Even though the recent weakness of the U.S. dollar has promoted a phased increase in bitcoin, gold and other non-US currency pairs. But Bitcoin’s performance this year is phenomenal, and we cannot explain it alone by one or several events or factors. The market is a chaotic body, and there may be many factors acting on it. As investors, we should focus on grasping the most important logic that drives asset prices.” Miles emphasized that financial giants will not invest in disorder, what is driving BTC The core logic of price increases? BTC is an anti-inflation product, and how to quantify inflation is an important factor behind the rise of BTC.
From the US 10-year breakeven inflation rate (Breakeven Inflation Rate), we can see how similar the trend of Bitcoin this year is to this curve representing inflation expectations.
Use TIP (U.S. Inflation Protected Bond ETF) prices to express inflation expectations
Since at least the second half of 2018, the relationship between Bitcoin and inflation has become closer and closer, and there is a trend similarity between the two. Although there is a divergence relationship between the two in individual stages, which may be affected by independent logic within the industry, the uniformity of this overall trend should give investors more enlightenment and room for further exploration.
In recent times, although inflation expectations have experienced a short-term decline in September-October, the upward channel has been restarted since November. This may also be an important macro background that supports BTC’s easy breakthrough of $20,000 and gold’s recent rebound.
