Bitcoin nears record before largest US crypto listing

Bitcoin nears record before largest US crypto listing

Bitcoin nears record before largest US crypto listing

Bloomberg

Bitcoin yesterday neared an all-time high as bullish sentiment gathered steam ahead of a listing by the largest US cryptocurrency exchange.

The token rose as much as 2.6 percent to US$61,229, the highest in nearly a month, before falling back to trade little changed.

On March 13, bitcoin reached a record of US$61,742. The cryptocurrency is up almost ninefold in the past year, a return that towers above that of more familiar assets like equities or bullion.

Representations of virtual currency bitcoin are pictured in an illustration on March 15. Photo: Reuters

Against the backdrop of Wall Street’s growing embrace of cryptocurrencies, the direct listing of digital-token exchange Coinbase Global Inc is fanning interest.

Coinbase is due to go public on the NASDAQ Composite tomorrow, the first listing of its kind for a major cryptocurrency company and a test of investor appetite for other start-ups in the sector.

“A crypto company moving to IPO [initial public offering] is a big milestone,” said Nick Jones, chief executive officer and cofounder at cryptocurrency wallet Zumo. “It’s moves like this that make consumers feel safer with crypto and ultimately boost confidence in the space.”

A growing list of companies are looking at or even investing in bitcoin, drawn by client demand, price momentum and arguments that it can hedge risks such as faster inflation.

Tesla Inc earlier this year disclosed a US$1.5 billion investment in bitcoin and more recently started accepting it as payment for electric vehicles.

Elsewhere, Goldman Sachs Group Inc has said it is close to offering investment vehicles for bitcoin and other digital assets to private wealth clients.

Morgan Stanley plans to give rich clients access to three funds that would enable crypto ownership.

The deck of exchange-traded funds tracking the token is expanding, while Paypal Inc and Visa Inc have begun using cryptocurrencies as part of the payments process.

A study by Dutch asset manager Robeco suggests that despite its high volatility, a 1 percent allocation to bitcoin in a diversified multiasset portfolio could be beneficial, given its resemblance to gold and its near-zero correlation to other asset classes.

“In recent months, a clear and emphatic narrative that bitcoin is becoming a store of value in the form of digital gold has developed,” Robeco portfolio manager Jeroen Blokland said.

Other cryptocurrencies, such as second-ranked ether, have also been climbing. The overall value of more than 6,600 coins tracked by CoinGecko recently surpassed US$2 trillion.

Bitcoin Nears Record Before Largest U.S. Crypto Exchange Listing

Bloomberg

(Bloomberg) – Looks like Wall Street is about to get 100 billion new reasons to believe in Bitcoin.Coinbase Global Inc., the fast-growing exchange at the center of the speculative frenzy in cryptocurrencies, is expected to go public this week at a staggering valuation of about $100 billion. That’s more than the venerable New York Stock Exchange and Nasdaq Stock Market combined – for a company that didn’t even exist a decade ago.If all goes according to plan, Wednesday’s scheduled direct listing on Nasdaq will cement Coinbase’s position as the Big Board of the U.S. crypto scene and a potent symbol of the risks and rewards of the new era of digital money. Its founders, Brian Armstrong and Fred Ehrsam, own stakes worth $15 billion and $2 billion, respectively, according to Bloomberg estimates.The bottom line at the San Francisco-based exchange would seem to justify the sky-high valuation, at least recently. Coinbase said last week it expects to report first-quarter profit of $730 million to $800 million, more than double what it earned in all of 2020. And revenue in the first three months of 2021 probably surpassed all of the $1.3 billion total for last year. That compares with the $5.6 billion of revenue Nasdaq generated last year.Coinbase has 56 million verified users and adds about 13,000 new retail customers a day, according to cryptocurrency analytics firm Messari.“Coinbase is one of the most prominent cryptocurrency exchanges in the world,” Mira Christanto, an analyst who covers the company for Messari, said in a research report. “The market has shown that investors are hungry for crypto exposure through equity markets.”It’s an astounding ascent for a company started in a San Francisco apartment in 2012 by Armstrong and Ehrsam, who met online in a Bitcoin forum on Reddit. The apparent demand for Coinbase shares mirrors the appetite for all things crypto: Bitcoin has surged almost eightfold in the past year, hitting a record $61,742 in mid-March.The opportunity for Coinbase now is to capture the increasing number of institutional and corporate customers, such as MicroStrategy Inc. and Tesla Inc., that are buying Bitcoin for the long haul.“That’s going to be the Holy Grail for them if they can hold on to that business, because those folks are seen more as holders than traders,” said Julie Chariell, a senior analyst at Bloomberg Intelligence for fintech and payments firms.Providing additional products such as custody services might mean Coinbase could look more like a bank than an exchange in a few years, according to Chariell. “It’s a broader play, getting to be a one-stop shop for whatever you want to do with your crypto assets,” she said.Coinbase spokesman Elliott Suthers declined to make any company officials available for comment, citing the “quiet period” Coinbase is required to maintain before its Nasdaq listing.It’s been a long and sometime grueling road to the planned debut, and there are still risks to its business model.Coinbase disclosed in filings for the share sale that it had received a subpoena from the Securities and Exchange Commission. According to a person familiar with the matter, the inquiry was related to XRP, the digital token created by Ripple that’s the subject of an SEC lawsuit alleging it was sold as an unregistered security.That same month, the SEC announced it was suing Ripple and two of its founders for violating U.S. securities laws. Coinbase was forced to de-list XRP, which at the time was the third most-valuable cryptocurrency in the world.It’s difficult to tell how the loss of XRP affected Coinbase’s earnings because Bitcoin at the same time was skyrocketing to records, said Bloomberg Intelligence’s Chariell. A greater risk would be the need to de-list many of the alt coins Coinbase now offers if the SEC case determines XRP is a security.“It is a risk, definitely, but I just don’t think it’s a big risk at this point,” she said.Despite the XRP scrutiny, Coinbase’s expansion plans seem to be working. In 2020, coins on the exchange other than Bitcoin and Ether accounted for the largest revenue share, at 44%, according to its SEC filing.“It made economic sense for Coinbase to list high-demand tokens due to higher competition from other exchanges,” Messari’s Christanto said.Bitcoin LinkAnother risk: Coinbase’s fortunes tend to correspond to Bitcoin’s volatile history. The exchange only turned a profit last year as institutional demand for crypto assets propelled Bitcoin and other coins such as Ether to new highs. The recent lean years, known as the crypto winter, stretched from 2018 to 2019, with Bitcoin hitting a low of about $3,100 in December 2018. Until then, Coinbase was known for listing only the big hitters in the crypto world, including Bitcoin, Litecoin and Ether.Coinbase’s prospects won’t come down to a single token like XRP. The majority of its revenue comes from trading fees, with retail customers charged an average of 1.4% and institutional clients about 0.05%, according to Christanto.To get it through the lean years, Coinbase has conducted seven fundraising rounds for a haul of more than $500 million since September 2012, Messari research shows. That’s on top of the revenue from selling Bitcoin and Ether, which more than tripled last year to $134 million, according to Messari.All of that has provided a strong financial position for Coinbase to list publicly. Based on figures provided by the company, Chariell calculated that 5.5 million monthly users equates to $3 billion in 2020 revenue. The top 12 fintech firms to go public in the last six months have had price-to-sales ratios of 36 times, she said. Multiplying that by 2020 revenue gets you a very large number.“You’re easily over $100 billion in market cap,” she said.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

Will ensure interests of crypto investors are protected: Anurag Thakur

The government is considering all options with an open mind when it comes to cryptocurrencies, and will make sure that the interests of investors are protected, Anurag Thakur, minister of state for finance, has said. The Union minister, however, raised concerns over the high volatility in digital assets.

The government is in the process of formulating a Bill on cryptocurrencies. While the contents of the Bill are not yet known, the Centre in February had said that the Bill would seek to ban all private cryptocurrencies such as bitcoin and ether. However, in the recent past, it had hinted that it would take a “calibrated approach' towards digital assets.

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The government is very much open when it comes to digital currencies. The Reserve Bank is also working on India’s own digital currency and the government had also constituted an inter-ministerial committee, where secretaries had submitted a report,” Thakur told a TV channel during an interview.

In March 2020, The Supreme Court overturned RBI’s decision to ban crypto transactions in the country. “In the new crypto Bill, all these aspects will be considered. All options are being considered with an open mind," the minister said.

However, Thakur raised concerns over the extreme volatility in cryptocurrencies, such as bitcoin and ethereum. “Fiat currencies don’t see such fluctuation. We will ensure that the interest of crypto investors is protected in the Bill. But we want to make it clear that we are in favour of technology," the Union minister said.

During the financial year 2021, bitcoin jumped 800% from $6,641 on 1 April 2020 to $58,817 on 31 March 2021. The digital asset was trading at $60,865.44, up 1.8% around 1.25pm IST today, according to CoinGecko.

Welcoming the statements, Sumit Gupta, co-founder and chief executive officer of crypto exchange CoinDCX, said: “We are confident that sensible and positive regulations are on their way. Today, the world has accepted the immense potential of crypto assets and blockchain technology and with heightened interest levels in India, the government will do immense service to Indians by bringing positive regulations in this sector."

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