On Wednesday, cryptocurrencies will take another huge stride towards the mainstream when digital currency exchange Coinbase Global Inc becomes the first major crypto-centred startup to begin trading on a United States exchange.
Not so long ago, cryptocurrencies like Bitcoin were derided by many financial-world sceptics as a flash in the pan; a folly for aspiring anarchists and investors with an outsized appetite for risk, not to mention a cloak for criminals engaging in nefarious online activities.
Well, that narrative is about to encounter its biggest pushback to date.
On Wednesday, cryptocurrencies will take another huge stride toward the mainstream when digital currency exchange Coinbase Global Inc becomes the first major crypto-centred startup to start trading on a United States exchange.
Coinbase’s debut on the Nasdaq comes as the world’s largest cryptocurrency, Bitcoin, is accelerating its march toward becoming a mainstream form of payment.
The pace started heating up last October when PayPal Holdings announced it would launch a service to let US customers buy, hold and sell cryptocurrencies directly from their PayPal accounts, and soon enable customers to pay for purchases in crypto.
Then in January, Tesla chief Elon Musk gave Bitcoin his stamp of approval when he added #Bitcoin to his Twitter profile. Not long after, Tesla disclosed that it had brought $1.5bn worth of Bitcoin and would soon allow customers to start buying Teslas with it- a pledge it started making good on last month.
Other companies have also started amassing Bitcoin, while major investors – and small ones, too – have been getting in on the action as well, adding Bitcoin to their portfolios.
Those investments have been on a meteoric winning streak this year. One Bitcoin was worth around $29,000 at the start of January. On Wednesday it smashed through $64,000 – propelled most recently by the heat around the Coinbase listing.
“The Coinbase IPO is potentially a watershed event for the crypto industry and will be something the Street will be laser focused on to gauge investor appetite,’” Wedbush analyst Daniel Ives wrote this week.
Crypto’s growing appeal with investors has also gotten a pandemic boost, as near-zero interest rates designed to shore up the economy make riskier assets and their potential for bigger payoffs more appealing. Many also see crypto as a store of value as inflation picks up along with vaccinations and reduced restrictions.
But crypto is also famously volatile. Previous run-ups in Bitcoin, for example, have been followed by spectacular busts that have seen values plummet by some 80 percent.
In February, US Treasury Secretary Janet Yellen told the New York Times that Bitcoin is an “inefficient” way to conduct transactions, and said she worried about the “potential losses investors could suffer” given its history of volatility.
Shares of Coinbase, which will be traded on the Nasdaq under the ticker COIN, is one way for investors to get a slice of crypto action without buying coins or tokens directly.
Coinbase is going public via a direct listing that allows existing shareholders to directly sell those shares to the public.
The Nasdaq gave Coinbase a listing reference price of $250 a share on Tuesday, but it’s expected to open higher than that. Many Wall Street analysts believe Coinbase could quickly reach a market capitalization of $100bn, which would make it more valuable than the New York Stock Exchange and the Nasdaq Exchange combined.