Coinbase Goes Public via Direct Listing I Janet Yellen, Bitcoin and Crypto Fearmongers Get Pushback from Former CIA Director

Top stories and news you should know in the bitcoin, crypto, and decentralized markets

High Level

  • Coinbase Global Inc. (COIN) went public last Wednesday via a direct listing, an alternative to a traditional initial public offering or merger with a special acquisition company, that has been popularized recently with other technology companies such as Palantir, Slack, Spotify, and Roblox

  • Around 8AM CST, the reference price for shares of Coinbase were valued at $250, then as investors were eagerly awaiting the first trade over the morning indicative price of shares began rising that were around $380 at Noon with 8.6M paired shares and opened up at $381 or 50% over its reference price and peaked just above $420

Drilling Down Deeper

Coinbase is seeing a rocky start in their debut as a publicly-listed company trading on the NASDAQ.

Coinbase’s humble beginnings start with the story of the founders, Brian Armstrong and Fred Ershram, meeting after being introduced to each other over Reddit. They decided to live in a San Francisco apartment with their startup in 2012. The company was valued at over $100B on its initial day of trading.

It effectively provided retail investors an easy on ramp to access bitcoin and eventually other crypto assets as time went on and grew its business larger. Coinbase undercut the traditional banks and brokerage houses by offering their users assets and platforms that they desire as well as suits their aptitudes. They did so very early and since have seen many competitors pop up over the years including Cash App, Gemini, Kraken, PayPal, Robinhood, and Voyager.

It has other competition within the crypto space itself, and these newer contenders offer even more than a publicly-traded company crypto exchange like Coinbase. These challengers are decentralized exchanges, or “DEXs,” who allow users to buy and sell crypto assets directly with one another in a non-custodial fashion as well as privately without any know your customer (KYC) requirements. Just as Robinhood has been accreting users from its traditional competitors with no fees and moving the retail market towards instant settlement, these DEXs are doing the same to regulated exchanges like Coinbase, Gemini, and Kraken among others that are based in the United States.

It begs the question, could Coinbase simply be trying to gain the first mover advantage that allows it to increase its market share over other contenders? Whether or not that is true, it could be argued that their success will be dependent on how well they can treat their users who may be inclined to move to cheaper, faster, and more private venues which may better fit their needs and wants. If Coinbase does not keep itself competitive against these upstarts in the DeFi markets, it could see itself lose their foothold as the one of the leading liquidity providers and as a venue with some of the highest trading volumes in these brave new markets.

Just as Robinhood exposed the old guard and inefficiencies of T-2 in the traditional financial markets, Coinbase may similarly expose its own lack of ability to produce the same advantages as DEXs that may drive an exodus and movement to their decentralized rivals. Decentralization is the way of the future and prosperity for humanity. Unless they can figure out how to continue innovating and helping shape a better financial system that democratizes finance and investing, they risk falling short to those ambitious and bold newcomers.

Coinbase’s true measure of success will be its stock outperforming BTC and/or ETH.

TL;DR Coinbase’s inspiration for going public may have been Ricky Bobby’s slogan, “If you’re not first, you’re last.”

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News You Should Know

Janet Yellen, Bitcoin And Crypto Fearmongers Get Pushback From Former CIA Director

The former acting director of the Central Intelligence Agency, Michael Morell, who’s a 33-year veteran of the agency published an independent paper that summarized the broad generalizations about bitcoin being used in illicit finance are significantly overstated and blockchain analysis is a highly effective tool to gather intelligence for crime fighting. The findings put the percentage of illicit transactions in crypto being less than 1% and is falling, according to one report from Chainalysis. His paper was commissioned by the newly formed Crypto Council for Innovation with Coinbase, Fidelity Digital Assets, and Square as its founding members…

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Republican House Leader Doubles Down on Bitcoin as Counter to China

The House Republican Minority Leader, Kevin McCarthy, when asked about the understanding of bitcoin and digital currency on Capitol Hill took shots at the Federal Reserve System’s Jay Powell, the Secretary of the Treasury Janet Yellen, and JPMorgan Chase CEO Jamie Dimon. His words came as the price of bitcoin was hitting all-time-highs above $64,000 as he spoke to CNBC about them ignoring them in the hopes of them going away, but as we all know they are here to stay. He made that point abundantly clear that he wants the United States to be leaders in the space and not wanting America to fall behind other countries moving forward like China…

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US Senate Confirms Gary Gensler as Joe Biden's SEC Chairman

In a vote of 53-45, last Wednesday Gary Gensler was confirmed as the new chairman of the Securities and Exchange Commission. The Biden pick is marking a bold financial regulatory regime under the new administration, and it is being said the SEC under his guidance will focus on regulating the budding crypto industry. Gensler’s career is known for his start as a banker at Goldman Sachs prior to becoming the chairman of the Commodity Futures Trading Commission, where he worked on making the Dodd-Frank reform legislation and aggressively laying down new rules in the derivatives market. Having taught a popular blockchain course at MIT, many crypto enthusiasts and investors are hopeful that his knowledge and understanding of the assets, networks, and technology underlying them will lead the agency towards pro-crypto regulation including the approval of bitcoin and crypto ETFs…

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“We need to make sure that the conventional wisdom that is wrong about the illicit use of Bitcoin doesn’t hold us back from pushing forward the technological changes that are going to allow us to keep pace with China.”

— Michael J. Morrel, Former Director of the CIA

Market Dashboard

Bitcoin Dominance = 50.5%
Ethereum Dominance = 14.5%
(over 9,400 cryptocurrencies)
Last Close = $51,800 (as of Apr. 22, 2021)
Market Capitalization = $967B
YTD Performance = +79%
*NEW ALL-TIME-HIGH @ $64,900 on 4/14/2021
Last Close = $2,400 (as of Apr. 22, 2021)
Market Capitalization = $277B
YTD Performance = +225%
*NEW ALL-TIME-HIGH @ $2,644 on 4/22/2021

Bitcoin over the past week has seen some fresh highs above $64K with many traders buying the rumor and selling the rumor causing its price to slide about 26% peak to trough using today’s lows. High expectations spread across the market with Ethereum also rocketing to new all-time-highs into this week as more institutional investors see it as a compelling asset that enables all sorts of decentralized applications and permission-less, speedy transactions. Crypto assets, or altcoins specifically, have been on massive run that has taken bitcoin’s dominance below 50% for the first time since 2018 showing the amount of interest in alts and DeFi. Exchange data showed last Saturday night was a systemic deleveraging of the bitcoin and crypto market as liquidations swept across multiple exchanges in a vicious shake out that played out over a 20 minute period that took $8,000 of value off the price of a bitcoin alone. Taking that drop into this week, plus news coming out of China as well as the climate and environment FUD helped take the price even lower before President Biden’s capital gains announcement that triggered even more panic selling from the overextended or weak hands. Bitcoin has broken its 30-day moving average and is sticking around $50,000 at its first major resistance point on the downside and the mean of its 2-year linear regression, which could mean that it may simply be attempting to set a higher low before making another massive move to the upside. Other major resistance points using the Fibonacci retracement are around $40K (-40%), $33K (-50%), $25K (-60%), and if we repeated a 2017 top to 2019 bottom would see it as low as $15K-ish (-80%). It appears that the bottom is materializing in the order book with a bid wall forming, so do not count out the possibility that this dip isn’t like going from $4K to $3K before moving higher as it has done historically. It really looks like the bitcoin and crypto market as a whole is at an inflection point, we will just have to wait and see how it plays out directionally.

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Bloomberg Businessweek on 4/20/2021 (Source)

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