Coinbase IPO: Everything You Need to Know

| Updated
by José Oramas · 8 min read
Coinbase IPO: Everything You Need to Know
Photo: Depositphotos

Only a few days are left before Coinbase goes for listing, and the crypto-community is now eager to know not only how the exchange will perform and how this will affect the crypto market, but also what this means for cryptocurrencies overall.

The US largest and most popular digital exchange Coinbase is going public. Instead of conducting a traditional initial public offering (IPO), Coinbase decided to choose a direct listing of its Class A common stock. Now all eyes are on the process, with the community waiting for April 14.

Coinbase Overview

Coinbase is a fully regulated and licensed cryptocurrency exchange supporting all US states except Hawaii. Being the largest US exchange, it is one of the easiest platforms to trade Bitcoin (BTC) and other cryptos.

History and Founders

Coinbase appeared in 2012 as a fully regulated and licensed cryptocurrency exchange for all the states in the US. Headquartered in San Francisco, it was established by former Airbnb Inc (NYSE: ABNB) engineer Brian Armstrong and former Goldman Sachs Group Inc (NYSE: GS) trader Fred Ehrsam. At first, Coinbase only allowed Bitcoin trading but soon began adding other crypto assets. Since its launch, it has become the largest centralized crypto exchange in the US.

With over 30 million users and more than $30 billion in trading volume, Coinbase has support in 102 countries.

Functioning and Features

The exchange offers a wide range of features for users, such as custodial accounts for institutions, a platform for buying and selling dozens of digital assets with high liquidity in the market. In essence, Coinbase is an online trading platform for crypto assets. It also acts as a digital wallet to store all your cryptocurrencies in one unified site, similar to a bank application. You can see the number of cryptocurrencies and check in on their current price.

As with all other crypto exchanges, you receive a unique address to accept crypto payments. This address allows other people to pay you in crypto or make payments with them in a peer-to-peer system without needing third parties.

Coinbase works both as a crypto wallet and as a web-based trading platform that you can use both on Android and iOS. Once you log in, the platform will show your portfolio balance and the performance of all your crypto assets in several time frames (1 hour, 24 hours, one week, and so on).

There are three options above your balance: to verify your account, to add a payment method, and to buy crypto.

You can place market orders for the cryptos you want to buy (if they are available) as well as convert or sell your assets.

You can also deposit funds into your wallet using wire transfer, credit cards, or your bank account. Sending money using Coinbase is simple: for Coinbase-like wallets, off-chain sends do not incur transaction fees and are instant. For other wallets, a minimum payment is essential, and time will depend on how busy the respective blockchain network is.

How to Make Money on Coinbase?

There are two ways to make money on Coinbase. On the one hand, you can add funds to your wallets using the methods mentioned above. You can convert your Tether (USDT) or any other stablecoin you have for Bitcoin, Ethereum (ETH), or any other asset you want. Price will automatically update according to market movements.

On the other hand, if you’re an experienced trader and want to trade currencies actively, you can use Coinbase Pro. Notably, this platform is not downloadable, it is solely web-based. You can access it through your phone or computer. The interface offers several features and has a clear and effective system. After signing in, you have Buy / Sell options on the left. Coinbase Pro offers lower fees, margin trading, and x3 leverage on USD-quoted books.

Available Coins

There are over 30 altcoins available for trading on Coinbase. Currently, the following are listed:

Coinbase Valuation

Now that Coinbase is ready to go public, valuation has soared tremendously. As of March 2021, Coinbase’s valuation peaked at $68 billion, now estimated to be worth around $100 billion, according to outlet Axios. The valuation is based on a volume-weighted average share price that Coinbase cited in an S-1 filing.

Some analysts are now discussing whether or not the company is overvalued. It is challenging to decide a start-up’s valuation by relying on the information before the public listing at specific points.

After its listing, the exchange should release new financial information about the outside capital that flocks to the company. That is the best way to determine a company’s valuation. Coinbase earns commission fees for transacting crypto-assets and the volume of transactions on the exchange like any other exchange. Relying on this data only can provide inaccurate results.

The last time that Coinbase was valued correctly was in 2018 when it was worth $8 billion after a $300 million funding round.

On January 29, Coinbase sold its stocks on the private market, offering over 1.8 million shares in weekly batches. The initial batch of 75,000 shares sold for $200 per share, which gave the company a valuation of nearly $54 billion. The following two batches had prices of $301 and $303. The fourth batch of 127,000 shares was sold for $373, giving Coinbase a valuation of over $100 billion.

In all cases, the only way to know the accurate valuation of Coinbase is after its financial sheet is revealed after the listing.

Coinbase Earnings

Amid the upcoming listing, Coinbase released its estimated results for Q1 2021 that ended on March 31. To sum up the company’s performance, its total revenue makes up approximately $1.8 billion, up from $190.6 million in Q1 2020. Further, Coinbase’s net income has grown to $730 million to $800 million from Q1 last year’s $31.9 million. Trading volume totals $335 billion. In addition, Coinbase has reported an estimated 56 million verified customers as well as 6.1 million monthly transacting customers.

Looking forward, Coinbase expects one of the three possible scenarios for the full 2021 to take place. These scenarios are as follows:

  • High expectations: average 2021 MTUs of 7.0 million. This implies an increase in crypto market capitalization and moderate-to-high crypto-asset price volatility.
  • Mid expectations: average 2021 MTUs of 5.5 million. Flat crypto market capitalization and low-to-moderate crypto-asset price volatility are assumed.
  • Low scenario: average 2021 MTUs of 4.0 million. This scenario assumes a significant decrease in crypto market capitalization as well as low levels of crypto-asset price volatility.

Preparation for Listing

Coinbase will be listed as a publicly-traded company on the Nasdaq on April 14. At least 114.8 million Class A common stocks will begin trading on the Nasdaq Global Select Market under the ticker symbol COIN.

Coinbase will not go public through an Initial Public Offering (IPO). Instead, the firm will have a direct listing, which allows Brian Armstrong and other shareholders to sell their stocks as soon as it goes public.

Coinbase disclosed an average private share price of $343.58, and the Nasdaq will probably use this price as a reference ahead of the company’s direct listing.

What Are the Risks of Coinbase Going Public?

The success of Coinbase will depend on a series of factors related to the use of digital assets instead of fiat. An important move for the crypto market was the US government announcing a $1.9 trillion stimulus package. As the Federal Reserve prints this money, the US dollar decreases in value. This is why investors are considering switching to the other side of the story – crypto-assets.

Bitcoin is now considered to be the largest hedge fund against inflation of fiat currency. The COVID-19 pandemic still has a robust effect on the traditional equity market. This has led to some investors’ interest switching to commodities such as gold, while others have turned in favor of cryptocurrencies.

What Does Coinbase Listing Mean for Bitcoin’s Future?

Coinbase becoming the first publicly traded exchange on the stock market is a significant milestone for the crypto-space, as it will put digital assets in the most important market globally, giving it a broader space in the mainstream.

The crypto market in general and Bitcoin in particular could experience a dramatic boost not only with Coinbase’s direct listing but also with a possible Bitcoin Exchange-Traded Fund (ETF). The institutional adoption of crypto-assets and the push for a Bitcoin Exchange-traded fund have boosted the crypto market to top $2 trillion.

If a Bitcoin ETF is approved, then together with Coinbase’s public debut, Bitcoin and the global crypto market could be sitting soon on a new all-time High. Institutional capital, speed traders known for investing massive amounts of money in quick trades, as well as accredited investors, would soon flock seeking exposure to BTC.

Conclusion

There is a lot of hype for Coinbase’s direct listing, and this could provide a great opportunity for the crypto market as Coinbase will become the first publicly traded exchange fully licensed and recognized by regulatory bodies in the US. Now all eyes are set on April 14, and everybody is anticipating seeing how the company will perform after its listing.

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FAQ

What is Coinbase and why is it the most popular crypto exchange?

Coinbase is an online trading platform for crypto assets. It also acts as a digital wallet to store all your cryptocurrencies in one unified site, similar to a bank application. You can see the number of cryptocurrencies and check in on their current price.

Coinbase was founded in 2012 as a fully regulated and licensed cryptocurrency exchange for all the states in the U.S. At first, Coinbase only allowed Bitcoin trading, but soon it began adding other crypto assets. Since its launch, it has become the largest centralized crypto exchange in the U.S.

The exchange offers a wide range of features for users, such as custodial accounts for institutions, a platform for buying, selling, and trading dozens of digital assets with high liquidity in the market.

When is Coinbase going public?

Coinbase will go public on April 14, with an estimated market valuation of $100 billion.

Is Coinbase overvalued?

It is challenging to decide on a company’s valuation before the public listing at specific points. 

The best way to determine Coinbase’s proper value is by waiting on the official S-1 filing after it goes public. The S-1 filing could give us a greater insight into the company, such as its profitability and valuation.

After its listing, the exchange should release new financial information about the outside capital that flocks to the company. That is the best way to determine a company’s valuation. Coinbase earns commission fees for transacting crypto-assets and the volume of transactions on the exchange like any other exchange. Relying on this data only, without knowing the actual value of Coinbase holdings, can provide inaccurate results.

What is special about Coinbase listing?

Coinbase will soon become the first publicly traded exchange on the stock market. This milestone is quite significant for the crypto-space, as it will put digital assets in the most important market globally, giving it a broader space in the mainstream. 

What does Coinbase listing mean for Bitcoin’s future?

The crypto market and Bitcoin could experience a dramatic boost with Coinbase’s direct listing. With the listing on the stock market, speed traders, institutional capital, and accredited investors could flock as soon as it is ready to trade.

Is Coinbase worth investing in?

Coinbase is the largest exchange in the world, its liquidity, trading platform, and overall system make it the exchange preferred by many investors and traders globally.

What are the potential risks of Coinbase listing?

The success of Coinbase will depend on a series of factors related to the use of digital assets instead of fiat. An important move for the crypto market was the U.S. government announcing a $1.9 trillion stimulus package. As the Federal Reserve prints this money, the U.S dollar decreases in value. This is why investors are considering switching to the other side of the story – crypto-assets.

Bitcoin is now considered to be the largest hedge fund against inflation of fiat currency. The COVID-19 pandemic still has a robust effect on the traditional equity market. This has led to some investors’ interest switching to commodities such as gold, while others have turned in favor of cryptocurrencies.

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