The next chapter in the crypto craze will be a pivotal one.
Cryptocurrency exchange Coinbase will make its public market debut Wednesday with a valuation between $ 50 billion and $ 100 billion, ahead of major stock exchanges such as Nasdaq and Intercontinental Exchange, the parent company of the New York Stock Exchange.
The move could force investors and institutions alike to take a closer look at the entire digital asset space, Amplify ETFs founder and CEO Christian Magoon told CNBC’s “ETF Edge” on Monday.
“There could be a revaluation for this entire segment higher if you see some numbers coming from Coinbase,” said Magoon, whose blockchain-focused Amplify Transformational Data Sharing ETF (BLOK) is likely to add Coinbase to its holdings after its debut.
Coinbase’s revenues for the first quarter of 2021 were 1.5 times its revenues for all of 2020. It is the largest cryptocurrency exchange in the United States and will be the first of its kind to enter the public arena.
“I think we will see more private companies go public because hopefully they see the path Coinbase is taking that recognizes value in the public market,” said Magoon.
In addition, in the past two months, at least four exchange-traded fund issuers have filed for crypto-related ETFs that could benefit from what will likely be the largest pure-play public company in the industry, Magoon said.
“This will be a new asset class in the ETF space that will be built beyond the two or three funds that exist today,” he said, adding that Ark Invest’s fintech and innovation ETFs are also likely to develop. will buy.
Investors “simply cannot ignore” a company that managed to increase its earnings ninefold year-on-year, Matt Hougan, Bitwise Asset Management’s chief investment officer, said in the same “ETF Edge” interview.
“You just don’t see this kind of growth from large-cap stocks,” said Hougan, whose company runs the Bitwise 10 Crypto Index Fund (BITW). “ Any investor, not just crypto investors, will have to factor in that growth, think about where it’s going and decide if it belongs in a wallet, and that just makes it a game changer for where crypto exists on the aggregate. capital market. spectrum.”
Hougan compared concerns over Coinbase’s listing to private investors over Facebook’s 2012 IPO, which was also made public with a valuation of $ 100 billion.
People said the valuation was absurd. People didn’t trust it because it was kids dressed in hoodies serving a new audience they weren’t familiar with. It’s the same here. This is a giant business that generates real revenue and real profit , “he said.” I think those valuations may not be as absurd as people think, it’s just that people aren’t comfortable with this corner of the economy in the same way they were uncomfortable in 2012 with Facebook. “
The valuation talk is unlikely to stop with purely crypto companies, Tim Seymour, founder and chief investment officer of Seymour Asset Management, said in the same “ETF Edge” interview.
“This is a limit that the multiples of what people are willing to pay don’t make sense. Seymour said. “We can name all the companies that have seen a significant rise in market capitalization here.”
“So look, it’s exciting,” he said. “It’s exciting to have that pure game. I think that’s really the point, and where it settles is going to be another issue as well. I mean, think of the movement we’ve had in the underlying currencies, especially outside of bitcoin. and even in the broader digital token landscape, all focus on NFTs, and you get the perfect storm here for this valuation, which is all over the map. ”
Bitcoin hit a new all-time high on Tuesday prior to listing. According to Coin Metrics, the cryptocurrency is up nearly 118% this year.
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