In what was one of the most anticipated public debuts from a company in recent memory, the largest American cryptocurrency exchange Coinbase (NASDAQ:COIN) began trading on the NASDAQ exchange on Wednesday. While the actual stock performance of Coinbase was slightly anti-climactic, the hype machine around the direct listing was at an all-time high. Shares began trading at an elevated price of $381.00 per share after the NASDAQ started the bidding at $250.00 per share pre-market. The stock eventually ran all the way up to an intraday high of $429.54, before a late afternoon sell-off saw Coinbase close its first trading session at $328.28, although there has been some significant buying of the dip in after-hours trading.
Coinbase market cap $85 billion after the first trading day
The closing price gave Coinbase an official market cap of just over $85 billion after its first day of trading, a price that rivals other tech giant debuts like Facebook (NASDAQ:FB), Alibaba (NYSE:BABA), and Shopify (NYSE:SHOP). How the stock performs from here is a mystery, but there are plenty of naysayers who believe that the valuation of Coinbase will forever be linked to the price of Bitcoin, as there is a direct correlation between Coinbase’s most recent quarterly revenue report of $1.8 billion and the surging all-time high price of the benchmark crypto.
But Bitcoin was not the only sympathy play that rose in anticipation of Coinbase’s debut as Ethereum and DogeCoin both blasted through to new all-time highs Tuesday night and into Wednesday’s market open. Cryptocurrencies have been rallying in 2021, buoyed by both the ongoing volatility of the broader securities markets, as well as the continued fear of inflation that is looming over the global economy.
The aggregate market cap of all cryptocurrencies hit $2.2 trillion recently, with a majority of that being Bitcoin and Ethereum. Despite Bitcoin’s popularity as a store of value, Ethereum has hit mainstream headlines of late due to the importance of its Blockchain network. Of note, NFTs or non-fungible tokens mainly use the Ethereum network to digitally certify authenticity, which has turned investors on to the overall utility of Ethereum as an investment.
Coinbase trading on Wall Street cements cryptocurrencies as a legitimate investment for the future
Coinbase trading on Wall Street marks a significant step towards cementing cryptocurrencies as a legitimate investment for the future. While the suffix of currency is always a little misleading with coins like Bitcoin, the broader adoption of cryptos by mainstream financial companies has also added to the recent fervor. Companies like Square (NYSE:SQ), PayPal (NASDAQ:PYPL), Visa (NYSE:V), Mastercard (NYSE:MA), and Tesla (NASDAQ:TSLA) have all reported adding Bitcoin to their balance sheets both as enterprise investments and for use with customers.
Where Coinbase ends up as a publicly-traded stock is anyone’s guess. The industry moat is questionable, as there are dozens of other crypto exchanges including the world’s largest in Binance, Kraken, BlockFi, Robinhood, and the Cash App. While future earnings reports will be thoroughly analyzed, there is no denying the impact that Bitcoin’s price will have on Coinbase’s revenues, and that alone may be enough volatility to scare away most investors.