Excellent John K. Kumi is a cryptocurrency and fintech enthusiast, operations manager of a fintech platform, writer, researcher, and a huge fan of creative writing. With an Economics background, he finds much interest in the invisible factors that causes price change in anything measured with valuation. He has been in the crypto/blockchain space in the last five (5) years. He mostly watches football highlights and movies in his free time.
The listing of Coinbase (COIN) is of much interest in the cryptocurrency industry. It is believed that this will expose cryptocurrency to mainstream investors.
Ark Investment Management has made a big investment in Coinbase Global Inc (NASDAQ: COIN) shares on its debut on Wednesday. The three funds at Ark Investment Management namely, Ark Generation Internet ETF, Ark Fintech Innovation ETF, and Ark Innovation ETF, made a combined purchase worth $246 million at $328.28 for each Coinbase (COIN) share.
This implies they purchased a total of $748,205 shares of the largest cryptocurrency exchange in the US.
The anticipation of its debut caused a spike in demand which had a good impact on the Bitcoin price forcing an all-time high price record of $64,000.
The Coinbase (COIN) shares made their debut at $381 on Nasdaq. Interestingly, it made a continued climb on the price curve to hit its all-time high of $429.54 before falling down to close the day with $328.28. After recording a valuation as high as $112 billion, it took a nosedive with Bitcoin falling from its $64,000 as well.
Ark, since its inception in 2014 has been strictly selective in where to invest its money. All the companies that have had their shares of Ark’s investment fund are involved with disruptive trends.
The listing of Coinbase (COIN) is of much interest in the cryptocurrency industry. It is believed that this will expose cryptocurrency to mainstream investors to open doors for the $2 trillion valued markets to grow even more. Bitcoin which has been the main beneficiary in some of these adoptions has seen over 800% increase from last year to record a market cap of $1 trillion.
Despite the positive impact of the Coinbase (COIN) listing on Nasdaq, Nigel Green, CEO of deVere Group strongly believes that the new growth and adoption of the cryptocurrency industry will put it under strict government scrutiny.
“As the direct listing on the Nasdaq will reach a wider investment base other than the usual crypto evangelists, investors must expect much greater government scrutiny, ” he said.
Coinbase (COIN) has a lot of potential in the stock market with actively managed equity funds when its visibility and popularity are considered.
Coinbase (COIN) Still Seen as Risky Investment Despite Ark’s Purchase
Despite the positive start, Coinbase (COIN) investment remains questionable to conservative investors. The revenue of Coinbase (COIN) is tied to its trading volume, and in 2020, 86% of its revenue was obtained from the transaction fee. Bitcoin price pulled a massive bull-run from $7000 to 28,000 in 2020 causing the trading volume to rise and hence, their revenue. The reverse is also true.
A crashing cryptocurrency market affects the trading volume and their revenue too. In 2018, Bitcoin lost 72% of its value, and if this happens again in this highly volatile market, Coinbase (COIN) shares may be affected largely. Regardless, its early acceptance is going well, and how it will do in the future is just a matter of time.