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One important thing to note is that these are secondary transactions and not where the stock may potentially trade. Secondly, Coinbase doesn’t allow any second
by raiyu 6y ago
One important thing to note is that these are secondary transactions and not where the stock may potentially trade.
Secondly, Coinbase doesn’t allow any secondary transactions, this was a company sponsored (approved) secondary. As a result this created immense scarcity so you can see how much the price changes just in these limited sales.
Third, as we saw with the last bull run of Bitcoin everything with blockchain in the name had a halo effect so there is definitely upward momentum.
Fourth, there is no Bitcoin tracking security on public markets. Obviously if Bitcoin succeeds so does Coinbase, this is an Avenue to get exposure to that without having to invest in Bitcoin directly and since Coinbase makes money on volatility which Bitcoin has a tremendous amount you get to ride the swings up and down by investing in Coinbase and not having exposure to Bitcoin directly. Investing in the shovels not the gold.
Eventually companies grow in to their valuations and that is determined by supply and demand and ultimately revenue and profits. Coinbase is still growing rapidly and profitable so in today’s market there will be a huge premium for that.
Technically it most closely resembles zoom from a financial perspective and from a capturing the trends perspective so while the valuation may seem high if Coinbase isn’t worth this then neither is zoom.
When will there be a market correction it’s impossible to know. We could have said the same thing for the post two years and it still hasn’t happened.
Don’t forget that getting yield outside of stocks is increasingly difficult and while we are on HN trapped in the echo chamber of tech and tech stocks when you look at the old staples like Coca-Cola they haven’t appreciated during this time.
Large mutual funds could be rebalancing their portfolios to move more into tech which they should have done from 2010 onwards but largely resisted outside of FAANG stocks.
The only thing that is certain is that this is a wild ride.
- ianai 6y agohttps://en.wikipedia.org/wiki/Gresham%27s_law https://en.wikipedia.org/wiki/Gresham%27s_law Not sure of how it applies but there it is. One way I could see this going: the smallest unit of a Bitcoin is a Satoshi. What happens when that value is greater than a transaction base cost? Right now it’s $0.0005 or 100 millionth the cost of a coin. This implies a lot of runway.
- tracedddd 6y ago“Obviously if Bitcoin succeeds so does Coinbase” This seems obvious, but I’m not sure it’s the case anymore. DeFi has been growing, although hampered by ethereum right now, could eventually consume much of Coinbase’s income stream. They may need to pivot to more of a banking role as ethereum solves tx fees and DeFi grows on L2. Whether that means more or less profit is not clear. I have a theory this IPO is really a calculated approach to facing such a reality, while they’re still considered untouchable.
- Cullinet 6y agoI sincerely hope that the corollary doesn't apply edit meaning that you at least wouldn't want that to be exclusively true
- beaner 6y agoCoinbase's primary function isn't to supplant blockchain transaction volume, it's to provide a fiat gateway to acquiring cryptocurrency. Transaction throughput on ethereum only helps Coinbase, because it makes what they sell more attractive.
- tracedddd 6y agoI’m talking about DeFi - distributed exchanges, yield generating savings accounts, and collateralized loans. Additionally ERC20 stables so on and off ramps are significantly less important. I see Coinbase’s primary function as an exchange and a way to convert to dollars. Both are threatened now. They have low fees, low latency, and more usability... but will that last?
- beaner 6y agoCould be true, but the "de" in "defi" prevents it from killing Coinbase's main purpose, which is being the fiat -> crypto gateway.
- tracedddd 6y agoTrue, it is a challenge do do a decentralized on/off ramp. But it is also questionable if that’s worth $100B valuation, too, without everything else they do.
- sjg007 6y ago>Fourth, there is no Bitcoin tracking security on public markets. There are a few in Europe look up Exchange Traded Products.
- Voloskaya 6y agoThere is a Bitcoin etf on the TSX since this week, both in CAD and USD
- giarc 6y agoSo when markets closed on Friday, BTC was at about $55,000 and BTCC-B closed at $10.83. BTC continues to trade over the weekend obviously and is now at $57,000. Given this inbalance in trading times, should we see BTCC-B pop on Monday morning to catch up to BTC? Could one not buy/sell BTCC-B each morning depending on overnight activity of BTC?
- sjg007 6y agoProbably yes. It works the same way with after hours trading on the stock market.
- wcoenen 6y ago> Could one not buy/sell BTCC-B each morning depending on overnight activity of BTC? If the price went up, the sellers also know this and will adjust their offers though, so you won't be able to buy underpriced BTCC shares in the morning. You can bid at the previous day's closing price but good luck getting your bid filled.
- sjg007 6y agoI think the real arbitrage is between crypto exchanges.
- maxilevi 6y ago> Fourth, there is no Bitcoin tracking security on public markets Because of their big purchases Microstrategy stock (MSTR) tracks Bitcoin pretty well.
- dan-robertson 6y agoIf you buy microstrategy because you want to be exposed to bitcoin then you will be overpaying by a lot.
- hfsp 6y agoIf you don't gain exposure to btc through MSTR or otherwise, then you will have fun staying poor.
- hnrodey 6y ago>Fourth, there is no Bitcoin tracking security on public markets. $MARA and $RIOT are publicly traded companies in the US that professionally mine for Bitcoin. Their stocks ride the same wave as that of Bitcoin.
- hfsp 6y agoWave crest is higher. Similar to gold and gold miners.
- skeeter2020 6y ago>> When you look at the old staples like Coca-Cola they haven’t appreciated during this time. Pretty tough to eat appreciation; meanwhile Coca-Cola (and all those other old, boring companies) pays ~ 3.5% dividends annually. I'm sick of companies using my money for free to only fund their own growth.
- skybrian 6y agoYes, dividends count as a valid source of income and that’s a reason to own Coca-Cola. However, appreciation of a publicly traded stock is fine too, better even. When a publicly traded stock goes up, you can sell some stock and the money is just as good. Furthermore you’re paying less income tax since it’s capital gains, and you get to decide when to pay taxes on the gains. This is why stock buybacks are better in some ways than dividends for returning money to shareholders.
- skinnymuch 6y agoLong term capital gain taxes are lower than dividend taxes which are taxed as income, no?
- OiNG 6y agodividends can also be taxed at long term gain rates if the stock was held for some period of time before hand (see qualified dividends)
- dehrmann 6y ago> Third, as we saw with the last bull run of Bitcoin everything with blockchain in the name had a halo effect so there is definitely upward momentum. We did, but blockchain tech rallying on the bitcoin price is a little like paper producers rallying on a baseball card fad. But markets are irrational, so...
- wonderwonder 6y agoThe grayscale products come pretty close.
- kgwgk 6y ago> Fourth, there is no Bitcoin tracking security on public markets. Bitcoin futures are available since 2017 on CME and CBOE.
- Ir0nMan 6y ago>there is no Bitcoin tracking security on public markets $GBTC Grayscale Bitcoin Trust