2021 has been a rollercoaster year for the crypto industry, with Bitcoin (BTC) scaling up to an all-time high of $65,000 earlier this year in April, only to dip down to the sub $30,000 zone just months later. However, a moment that is widely considered by many to be a tipping point for the industry — at least in terms of mainstream legitimization — was when Coinbase (COIN) made its debut on Nasdaq via a direct listing.
Leading up to April 14, the day of the aforementioned listing, COIN’s reference price was set at $250. However, it is worth recalling that at the time, the digital asset market was at its absolute apex, as a result of which the COIN price rose sharply just minutes after its launch climbing as high as $430. That said, the asset’s price has since continued to dip steadily, currently trading at a 90-day loss of approximately 40% at a price point of around $242.
COINs relatively lackluster performance can, in part, be attributed to the bearish environment that has engulfed the market over the last few months. Since the stock was listed, the total market capitalization of the crypto market fell from $2.1 trillion to as low as $1.28 trillion. Despite this turbulence, however, a number of firms felt confident enough to go ahead and announced their IPOs.
Not only that, venture capital and institutional funds have continued to pour money into this space. For example, data available online suggests that more than $17 billion has already entered into various firms operating within this market. In May alone, Block.one, a blockchain software company, injected a whopping $10 billion worth of digital assets and cash into a new crypto exchange Bullish Global. Similarly, hardware wallet manufacturer Ledger SAS was also able to raise a cool $380 million from investors, led by 10T Holdings recently.
Why is COIN on the decline?
As things stand, COIN seems to be operating somewhere between the crypto and stock markets, i.e. the offering is a value-id based on crypto tech but could not play by stock market rules. Antoni Trenchev, co-founder of crypto lending firm Nexo, told Cointelegraph that COIN’s valuation is absolutely fine and that the asset is moving just like any other similar stock, adding:
“When there’s trouble on the horizon in the business’s industry, the stocks of companies working in the field tend to suffer. After all, Coinbase’s IPO took place in April with cryptocurrencies still circling all-time highs. Let’s not sugarcoat things, the market has dipped substantially.”
Despite Trenchev’s lack of apparent concern regarding Coinbase’s stock performance, Kadan Stadelmann, chief technological officer for blockchain solutions provider Komodo, believes that one of the biggest reasons for COINs decline has been the rise of decentralized exchanges (DEX). In their most basic sense, DEXs can be thought of as novel decentralized finance-, or DeFi-based offerings that seek to offer lower trading fees as well as better market maker incentives.
On the subject, Stadelmann further highlighted that in the past, Coinbase had focused its growth efforts exclusively on the United States market, something that seems to have hampered the adoption of COIN, adding:
“This is starting to change, though, with recent announcements that Coinbase would launch German operations and expand hiring in India. These moves are promising, but even with ample resources, it takes time to build a business presence in new markets where other crypto firms have established offerings.”
Trenchev too believes that just because Coinbase’s stock is being traded publicly doesn’t mean that it has reached mainstream investors. That said, he is convinced that the exchange is positioned perfectly to tap into a river of public investments. “The secret ingredient that’s currently missing is time. Mainstream investors need time to familiarize themselves with the crypto industry in order to confidently put money into companies like Coinbase. In…
Read More: cointelegraph.com