Bitcoin has shot toward its all-time high of almost $62,000 per bitcoin over the weekend as the cryptocurrency market gears up for Coinbase to go public.
The bitcoin price has added over 5% during the last few days as the wider crypto market and smaller tokens record bigger gains—pushing the combined value of the world’s cryptocurrencies to well over $2 trillion.
With San Francisco-based bitcoin and cryptocurrency Coinbase eyeing a valuation that could top $90 billion when it lists on the tech-heavy Nasdaq
Coinbase, one of the world’s largest crypto exxhanges with 56 million verified users, will not issue any new shares in its initial public offering (IPO) this week in what’s known as a direct listing.
The company’s latest results, released last week, shows it made a first-quarter profit of $730 million to $800 million—more than double what it earned in all of 2020. Last year, Coinbase recorded revenue of $1.3 billion with a profit of $322 million.
Meanwhile, Coinbase trading volume has also surged, climbing to $335 billion through the first three months of 2021, compared to $193 billion for the whole of last year.
Coinbase’s surging numbers come amid the latest bitcoin and crypto bull market that’s seen the bitcoin price soar by around 500% since October, helped by the emergence of long-awaited institutional adoption and Tesla billionaire Elon Musk whipping the crypto market into a frenzy.
Coinbase’s IPO is the first of its kind for a major cryptocurrency company and will be closely watched by other crypto startups considering going public as they try to gauge investor demand.
Kraken, Coinbase’s biggest U.S. rival, is considering going public via direct listing in 2022, it was reported by CNBC last week.
“We’re looking at being able to go public sometime next year,” said Kraken chief executive Jesse Powell, pointing to Kraken’s record bitcoin trading volume in the first quarter of 2021. “It would probably be a direct listing, similar to Coinbase.”
However, some are skeptical Coinbase will be able to meet the market’s sky-high expectations.
“Even though Coinbase’s revenue surged over the past 12 months, the company has little-to-no-chance of meeting the future profit expectations that are baked into its ridiculously high expected valuation of $100 billion,” David Trainer, chief executive of investment research firm New Constructs, in a report.
“The crypto markets are very young and we expect many more companies to compete for the profits Coinbase enjoys today. As the cryptocurrency market matures, we expect Coinbase’s transaction margins to drop precipitously.”