Coinbase (NASDAQ: COIN) went public yesterday in what was one of the most talked about initial public offerings in some time. Shares of the cryptocurrency exchange operator opened around $380, or more than 50% above the reference price, before settling just above $328.
Still, Coinbase has a market value of $86 billion – well in excess of dozens of S&P 500 companies that are decades older. Some experts believe the stock will become a proxy on Bitcoin while others see it resulting in more regulation for the crypto space.
“Of course, this is driven by the fact the world’s two biggest cryptocurrencies, Bitcoin and Ethereum, to which Coinbase is intrinsically linked, have risen 800% and 1,300% respectively over the last year,” said deVere Group CEO Nigel Green in a note. “But with these astronomical price jumps, and as they become increasingly embedded in the global financial system, and, critically, as the direct listing on the Nasdaq will reach a wider investment base other than the usual crypto evangelists, investors must expect much greater government scrutiny.”
Cryptocurrencies remain largely unregulated, which has deterred many potential investors. The Securities and Exchange Commission has so far rejected exemptive relief for any attempt to roll out a Bitcoin ETF, arguing that there is not enough protection against fraud and market manipulation in the cryptocurrency market. However, institutional investors are moving past those concerns and embracing Bitcoin in a big way. Coinbase may be just the latest iteration of that trend.
A Coinbase IPO to a Bitcoin ETF?
Some analysts forecast that with more high-level investors entering the Bitcoin market, the crypto’s daily trading volume could exceed that of domestic stocks in four years, and top the forex market in six years. Early affinity for Coinbase shares could test those theories.
“Governments, central banks and regulators will be keen to protect the currency status quo,” said Green. “We should expect considerably higher levels of regulation in the crypto market. Indeed, I believe it is inevitable.”
With Bitcoin and other cryptocurrencies captivating investors, talk is again increasing about the prospects for a Bitcoin exchange traded fund.
Multiple bitcoin ETFs recently debuted in Canada, and related exchange-traded products have existed in Europe for some time.
While the ETF market has been anxiously awaiting a Bitcoin ETF, the SEC has turned down all related proposals. Investors and the digital currency universe are hoping a change in leadership at the SEC could bolster Bitcoin ETFs’ chances of success. Positive regulatory developments may also serve to hasten the ETF approval process, or at least make an approval more likely.
For more news, information, and strategy, visit the Crypto Channel.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.