BitDigest April 15 · Issue #881

• Coinbase lists on Nasdaq closing with a $85 billion valuation
• Powell calls crypto speculative assets while questioning value of gold
• Brazil making progress on CBDC

Weekly Stock Update

COIN Ends First Day with $85.7 Billion Valuation

I spent most of yesterday morning sitting at my desk, waiting for Coinbase (NASDAQ: COIN) to start trading. At 1:25 PM, COIN posted its first trade at $381, 52% above the pre-announced reference price, and I watched with excitement as prices began to post on my screen.

$385, $390, $395 within minutes COIN was gaining. It broke $400 and continued its upward trend. $410, $420, $425. COIN finally hit $429, hitting a first day high of $429.54 but that’s when the declines began suddenly falling below $400. The rest of the day saw a gradual decline, hitting a low of $310 just after 3 PM, before recovering and ending the day at $328.28.

I’ll admit, my initial exuberance turned into disappoint as I watch COIN fall from the early morning highs, but as I think about this this morning, COIN’s first day performance was really a great success and milestone to my crypto journey. A cryptocurrency exchange, a trading service for a new digital money that only a few years early was being attacked and criticized by almost everyone on Wall Street (and many looking to get their names in the news) had ended its first day with a valuation above $85 billion – an incredible success!

Looking through yesterday’s trading picture, I came away with several thoughts:

• Although a direct listing appears to be a more complicated process – at least due to the order matching on opening day – I truly believe this is the future of public listings. It maintains greater control over the valuation with the company during the final funding rounds and eliminates the risk that of a sale at a more conservative price that escalates benefiting traders and not the company during the first session.
• Ahead of COIN’s opening, publicly traded crypto stocks were down, signaling that these public alternatives to bitcoin are potentially being replaced by a better market proxy.
• I was reminded of the impact that liquidity brings to capital markets. All morning, FTX’s COIN stock-token was trading above $500, but as ‘Mr. Market’ entered the picture, the true price was immediately discovered.
• Although Coinbase received 96% of its 2020 revenue from transaction fees, CEO Brian Armstrong says the company has not seen any margin compression and does not “expect to see it in the short and the mid term;” in the long-term he says  fee compression is likely, but explains that within 5 – 10 years, 50% or more of revenue could be derived from other offerings like debit cards and yield providing products.
• Lots of friends and industry colleagues were on TV and in the news speaking about this great moment in crypto’s history, but with every positive cheer and clanging of champagne glasses was the recognition that regulation is coming and will be the future topic of discussion.
• Opinions change. The idea originating by a group of ‘cypherpunks’ in the 90’s has revolutionized the financial world. My past several years of advocating for a new digital currency backed financial system is really gaining acceptance.

One last point on COIN, in celebration of yesterday’s listing and as a nod to Satoshi Nakamoto’s decision to add a message into bitcoin’s Genesis block, Coinbase had a message embedded in the bitcoin blockchain yesterday, adding “NYTimes 10/Mar/2021 House Gives Final Approval to Biden’s $1.9T Pandemic Relief Bill” into block height 679187.

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Thoughts on the Ecosystem