Tomorrow, on April 14, 2021, the US-based crypto exchange Coinbase will be going public with its much anticipated IPO. The crypto market is preparing anxiously for this event as the Bitcoin price has reached nearly $62,000 over the last week and the total cryptocurrency market capitalization has exceeded $2 trillion.
Coinbase was founded in 2012 by Brian Armstrong and Fred Ehrsam and has been the biggest crypto exchange in the United States since March this year. This San Francisco-based crypto platform boasts over 56 million verified users.
The company has been showing incredible results throughout the first quarter of 2021 with an estimated profit of $730 million to $800 million. This shows double their profits for the entire 2020 which was $322 million in a total revenue of %193 billion.
“Crypto markets have observed four major price cycles since 2010 which have typically had durations ranging from two to four years,” In a statement by Coinbase with their results that were released last week.
They had also revealed a part of their plan in saying: “In terms of expenses, we intend to prioritize investment, including in periods where we may see a decrease in Bitcoin price. This is because we believe that scale is central to achieving our mission and it is still early in the development of this industry.”
What to expect
Coinbase’s move toward an IPO will be the first of its kind for any major crypto company and we can be certain that its developments will be closely watched by investors and similar companies looking to go public.
CNBC reported last week that Coinbase’s biggest rival Kraken, is looking to go public next year with a direct listing as well. Some believe that the Coinbase’s IPO will see a massive boom in blockchain companies much like internet companies did in the 1990s.
Coinbase foresees a valuation of between 90 and $100 billion when it lists on Nasdaq under the COIN symbol this coming Wednesday and it will not be offering any new shares on its direct listing. Some experts believe that this valuation is an unrealistic expectation and that the company has little-to-no chance of reaching the future profit expectations included in this hopeful prediction.
Alberto Jauregui, Growth Lead of Pocket Network, said that the COIN listing will have a positive impact on mainstream adoption and the growth of the industry with retail investors in particular.
He went on to say “On the other hand, the revenue earned and capital raised will let Coinbase continue to consolidate influence over the industry through acquisitions, expansion of product offers, and domination of validator power in proof of stake blockchains, for example Cosmos or Tezos,” he added “We are big fans of what Coinbase has done to date, but we worry about the centralizing effects of the concentration of users on a single platform, negating the true benefits of decentralization.”
We can certainly expect to see the Coinbase stock soaring from day one due to brand recognition and the first-to-market position they currently hold, but investors are already looking for the next public offering to come from a crypto company. It will be interesting to see what effect the COIN IPO will have on the crypto market with earlier predictions of Bitcoin reaching up to $400k in this year. It is certainly a very exciting time for the crypto industry as we have witnessed major developments of late, such as the big move forward from Visa, and Tesla now also accepting crypto payments.