Coinbase Listing Will Cause "Crypto Gold Rush", Say ETF Investors

Coinbase Listing Will Cause "Crypto Gold Rush", Say ETF Investors

April 12, 2021

Key Takeaways

  • Coinbase’s stock listing on the stock market is promoting bullish sentiments around Bitcoin and crypto.
  • Galaxy Digital joins the list of Bitcoin ETF applicants with a registration filling this morning.
  • Finance experts are hopeful for a Bitcoin ETF approval this year.

Coinbase’s COIN stock listing and anticipation around Bitcoin ETF offerings will lead to the next phase of institutionalization of Bitcoin and crypto markets, according to experts. 

The Picks and Shovels of Crypto Industry 

Coinbase is the first U.S.-based exchange to obtain a green light for the direct listing of its shares. COIN will begin trading on NASDAQ this Wednesday. 

The pre-market tokenized version of the stock is trading at a $140 billion valuation on FTX. The value is two times higher than the New York Stock Exchange (NYSE) and six times more than the NASDAQ’s valuation. 

The PE ratio of a company measures the number of times market price is valued compared to earnings per share. Rudimentary calculations suggest that Coinbase’s PE is somewhere between 90-120.

The PE ratio based on Q1 returns of Coinbase also suggests that the stock could be overvalued. Exchanges like NASDAQ and Intercontinental Exchange (parent company of NYSE) operate at a price-earnings (PE) ratio between 25-30, and PayPal’s PE ratio is around 75.

Huge Profits Could Justify “Overvalued” Stock

On the other hand, Coinbase is profitable in an industry where many startups are not, with nearly 4 times the profit margin of the NASDAQ and a similar margin to PayPal. Jeff Dorman, a CFA and Chief Investment Officer of Arca, commented on Coinbase’s “massive” profits.

“38% of tech companies are unprofitable today, higher than the 36% at the tech bubble’s peak in March 2000. Yet, every headline I read is about how overvalued Coinbase $COIN is (despite massive profits) and how crypto is in a bubble.”

Moreover, according to Matt Hougan, chief investment officer at Bitwise Asset Management, Coinbase’s listing isgoing to force traditional finance to wrestle with the phenomenal growth in the crypto industry.” He told CNBC this morning, 

“I think we’re going to see a gold rush for crypto equities as investors realize just how fast the ‘picks and shovels’ companies of the crypto ecosystem are growing.”

ETF investors such as ARK Fintech Innovation ETF (ARKF) and the Global X FinTech ETF (FINX) are considered likely to buy COIN, and

It’s the same story with Christian Magoon of Amplify, the operator of Transformational Data Sharing ETF (BLOK), has confirmed that his ETF will be adding it as well.

Bitcoin ETF applications continues to compile with the U.S. securities regulator. Today, Galaxy Digital Funds LLC, a Canadian asset management firm, became the ninth firm to file for a Bitcoin ETF.

Disclaimer: At the time of writing this author held Bitcoin and less than $15 of altcoins.

The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.

You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.

See full terms and conditions.

Source: Read Full Article