The DFi Labs Weekly Wrap

Coinbase set to go public on april 14 - An Important Step Towards Further Adoption of Cryptocurrencies: An Important Step Towards further Adoption of Cryptocurrencies

The much-anticipated Coinbase Global Inc, the largest cryptocurrency exchange in the United
States, has finally received approval from the U.S. Securities and Exchange Commission (SEC) and will be listed on Nasdaq on 14 April under the ticker symbol “COIN”. This will pave the way for a milestone victory for cryptocurrency advocates.

On 25 February, Coinbase formally filed a prospectus with the intention of opting for an initial public offering in the form of a direct listing process (DLP). This direct listing is the exchange’s way of ensuring that there is a level playing field when it comes to buying and selling shares – a knowing allusion to the perceived decentralised impartiality of the cryptocurrency ecosystem. According to the data, the number of verified users on the Coinbase platform increased by 11 million in 2020 due to the huge rise of Bitcoin and other cryptocurrencies, a 34% increase from the end of 2019, and the total number of verified users reached 43 million at the end of the year.

It can be seen that the fierce volatility of the price of digital assets such as Bitcoin is highly correlated with Coinbase’s revenue and also determines the instability of Coinbase’s performance. In this context, Coinbase has also stated in its prospectus that it hopes the outside world will look at the fluctuations in performance from a longer-term perspective, rather than on a quarterly basis. In addition, there have been more and more institutional users on the platform since last year. Coinbase believes this trend will help weaken the correlation between transaction volume and volatility in digital assets. Data shows that in the fourth quarter of 2020, institutional users on the Coinbase platform contributed $57 billion in transaction volume, accounting for 64% of total transaction volume, the highest in history.

If Coinbase is successfully listed, it will mean that it will become the digital currency exchange’s first stock. In this respect, Coinbase’s listing will take the industry to the next level of compliance development, which is conducive to the entry of investors and institutions outside the currency circle, which is no small advantage for the industry. In addition, institutional investors also see Coinbase’s arrival on Wall Street as a way to get exposure to cryptocurrencies. In the event that an individual shows scepticism about buying these assets directly, Coinbase stock can serve as a safer alternative to participate in the market.

In February this year, the trading volume of cryptocurrencies jumped to $2.7 trillion. The cryptocurrency exchange (which can be considered a broker in the digital currency space) that builds channels will naturally become a consistent winner. This means that the traditional financial market with strict access control has recognised the mainstream and legal status of digital currencies and digital currency exchanges. The landing of Coinbase on US exchanges could trigger a wave of new listings for digital currencies. Under the general trend of increasing regulatory restrictions on crypto assets, Coinbase’s listing may open up the traditional financial funding channel of mainstream institutional funds.

Against the backdrop of institutional users becoming mainstream users, the entry of mainstream institutional funds into the traditional capital market is undoubtedly the best choice to take advantage of this institutional bull market and steadily expand the business areas and scale. As the first crypto-asset exchange to land on the “traditional” capital market, Coinbase’s listing is seen by industry experts as another milestone in the history of crypto-assets – following the listing of bitcoin mining machine company Canaan Technology in 2019.

The company also carries a dark underbelly The Commodity Futures Trading Commission fined it $6.5 million in March for artificially inflating transaction volumes between 2015 and 2018 to deceive investors (“wash trading”). The launch will be watched closely. Cryptocurrency enthusiasts want to see it as an additional legitimisation for this sector, which is sometimes still despised by traditional investors, regulators and the general public. It is also already regarded simply as one of the biggest tech launches of the year.

CRYPTO ASSET MARKET PERFORMANCES

Bitcoin formed a Doji candlestick pattern on 31 March and 1 April, hinting at indecision between bulls and bears. However, the positive sign is that the bulls have not given up much ground. The bulls are again trying to push the price above the $60,000 resistance. On 1 April, BTC broke through the $59,400 area, and it has been struggling to do so since 17 March. The rise seems to have been supported by news last week in which both Visa and Paypal announced plans to get further involved in the crypto world.

Many people now believe that Bitcoin is in a phase of price consolidation. To a certain extent, this concern is justified. After all, Bitcoin is the standard bearer of the cryptocurrency market, and its performance is critical to the general market. However, even if Bitcoin does not continue to break through the critical $60,000 threshold, there is no reason to worry. It is still far from the top of its 30-day and 365-day MVRV, despite the recent period of consolidation, Bitcoin can still rise a little, and of course there will be a recall soon. In fact, these indicators show that the price of Bitcoin still has a lot of room to rise. Historically, the top of the MVRV is the starting point for the price decline.

On the other hand, a sharp drop below US$56,000 can trigger a sell-off that drops the price below US$50,000 and approaches the support point of US$42,000.

On 3 April, the global market value of cryptocurrencies passed the US$2 trillion mark. The rush to the Ethereum price helped the altcoins’ market value to rise again to 45.5%. When the bitcoin price attacked the US$60,000 mark in mid to late March, it failed twice, further boosting investor confidence in altcoins. The price of hundreds of altcoins doubled last month.

Ethereum also started the month strongly against bitcoin. The coin bounced off support at 0.03 BTC last week and rose above 0.033 BTC in early April.

Buyers continued to push ETH higher until it reached resistance at 0.0361 BTC (March 2019 high) on Friday. It rolled over from there yesterday, but the bulls defended support at 0.035 BTC and have since rallied from there, trading at 0.0356 BTC today.

Know more about DFI Labs at www.dfi-labs.com

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All of the content published on this site is strictly for informational and educational purposes and neither does it constitute investment advice nor solicitation to buy or sell blockchain-based tokens or securities. No investments whatsoever should, therefore, be made based upon information provided or discussed by any guests or hosts appearing within this video or audio content.

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Crypto-tokens and equity investments are high risk in nature and you should always take the advice of a professional financial advisor from within the jurisdiction in which you reside before making any investment decisions.

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