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Many analysts believe that if Coinbase had had more faith in Bitcoin, its profitability would have been remarkably boosted.
The profitability of American cryptocurrency exchange Coinbase would have topped $2 billion had the company invested its seed money into Bitcoin (BTC) back in 2013. As reported by Cointelegraph, using the $30 million seed fund accrued by the company 8 years ago would have brought in more returns due to the massive growth that has been recorded in the price of Bitcoin in that time frame.
Coinbase exchange is arguably one of the latest and most celebrated companies seeking a public debut in American markets. Billed to conduct its public listing on April 14 for an eventual listing on the Nasdaq Global Select Market with a valuation of $68 billion which can soar up to $100 billion with fully diluted shares, the exchange’s current valuation, and profitability will have been dwarfed by direct investment in Bitcoin, at a time when the price was still relatively below $300.
Despite Coinbase reporting an impressive $1.8 billion revenue in Q1 2021 with net income ranging between $730 million to $800 million, Bitcoin has grown by more than 43,000% since 2013, and Coinbase’s cumulative profits to date which range between $780 million and $1.3 billion are still below the projected $2 billion the company would have earned through a direct early-on Bitcoin investment.
Coinbase Profitability May See More Push with More Faith in Bitcoin
While many are applauding the growth and strides of Coinbase, more detailed analysts and observers believe that if the company had had more faith in the industry’s premier digital asset, its profitability might have been remarkably boosted.
Using business intelligence and software company MicroStrategy Incorporated (NASDAQ: MSTR) as a basis for comparison, developer Vijay Boyapati noted:
“Coinbase is going to list publicly in less than 10 days and reported blowout numbers today (~800m in profit on 1.8B on revenue). Sounds great, but imagine how much more they’d be worth if they had held their profits in #Bitcoin instead of dollars for the last 8 years. According to Coinbase’s S1 filing, they own approximately 4486 bitcoins (compared to MicroStrategy which owns 91,579). Given how profitable Coinbase is they have been a net seller of #Bitcoin for years and years (since they naturally accumulate it through fees on trading).”
Drawing on his own assertions, Boyapati submitted that it is as though Coinbase has no belief in the broader cryptocurrency industry judging by the size of its holdings.
It's almost as if Coinbase doesn't even believe in the industry in which they are one of the biggest players. Sad.
— Vijay Boyapati (@real_vijay) April 6, 2021
The Bitcoin and general cryptocurrency investment terrain are changing as both institutional and retail investors are seeking the most legal and productive ways to gain exposure to the asset class. Coinbase has been seeing a considerable outflow of BTC lately as holders probably seek to store off their holdings in offline wallets.
KiYoung Ju, the CEO of crypto market analytics provider CryptoQuant believes these exchange withdrawals are a sign that the ongoing bull rally is not near its peak yet.