Does the Coinbase IPO mark the peak for bitcoin? — Quartz

Bitcoin arrived on one of the world’s most important exchanges, a watershed moment that could bring crypto from the fringes to the mainstream. The original virtual asset soared on optimism that it was an important step toward bitcoin becoming a fixture among institutional investors.

But we’re not talking about Coinbase’s IPO last week, an event that was seen as hallmark for the legitimization of crypto assets.

Instead, we’re talking about Dec. 2017, when bitcoin futures started trading on an exchange operated by Cboe Global Markets in Chicago. Futures were seen as an easy onramp for big time investors who are already plugged into Cboe, giving them a way to get exposure to crypto through a regulated exchange. Shortly after bitcoin futures went live on Cboe, a similar derivative also started trading on CME Group, the world’s largest futures exchange. In May 2018, Goldman Sachs executives sat down with the New York Times to talk about their plans to trade bitcoin derivatives.

Bitcoin peaked around $20,000 in Dec. 2017, according to CoinDesk prices. A year later it had plunged more than 80%, and it took another two years for it to climb back up to its Dec. 2017 level. Since then bitcoin has tripled the high in 2017: It was trading for more than $64,000 on April 14 this year, the day Coinbase, the largest US crypto exchange, went public on Nasdaq.

Is bitcoin’s price going to increase?

The arguments floating around Coinbase’s direct listing—crypto going mainstream, institutional bitcoin adoption—sound similar to the ones when bitcoin futures started trading. Could this time be different? It’s conceivable that more institutional investors really are involved in crypto these days, perhaps providing a floor that avoids another plunge that wipes out most price gains before another crypto winter.

But if big investors are trying their hands at virtual assets, much may depend on whether they are fast-moving speculative funds and market makers that merely aim to exploit bitcoin’s massive price swings, or whether they have a vision for investing and holding it for the longer term.

Cathie Wood, founder of ARK Investment, which has been buying Coinbase shares for its funds, cites a study that shows institutional investors are indeed adding bitcoin to their portfolios because they’re looking for assets with low correlations to other investments, like stocks, bonds and commodities. If the big players put 5% of their holdings into bitcoin, she told Bloomberg, that alone would increase its price by $500,000.

“We are at the very beginning of what we believe will be a long and exciting journey,” she said.