Just over a year ago, on April 14, 2021, US Coinbase made history by becoming the first major cryptocurrency company to launch freely tradable shares.
The launch was preceded by great anticipation as the bitcoin price hit new highs almost every day. This should give the rally its final push towards a $100,000 bitcoin.
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Major players like ARK Invest announced with great fanfare that they wanted to take advantage of this opportunity and bought a lot of stock.
The stock has been tradable for a year and we know that the price of bitcoin crashed like a pudding after the launch of Coinbase shares. The value of the share also experienced ups and downs. Time to look back, how has Coinbase performed? And what can be expected of the future?
Not a good year for Coinbase
When Coinbase made its debut on the public stock markets in April 2021, it was welcomed with open arms. At launch, the trading value of a share was $380. On the first day of trading, it proved too big a target, but the stock was very successful in the first few months.
The reason why stocks were quite stable and successful in the beginning was because the cryptocurrency market was still on a bull run. Bitcoin may have already reached its all-time high, but many popular altcoins didn’t peak until the end of May.
This helped stabilize share value and increase confidence in the shares’ future potential.
But the crypto market has no mercy, or really China and Elon Musk have no mercy. China banned bitcoin mining and Musk stopped Tesla crypto payments. Since Coinbase is a cryptocurrency company, the value of its stock seemed to be closely related to the performance of the cryptocurrency market and this had a negative impact on the price.
Towards the winter of 2021, bitcoin revived for the last time and was worth almost $70 thousand, a new record. You can also see that directly from the chart above, Coinbase’s share reached a new high.
Since then, the market seems to have lost interest. Many altcoins are no longer a shadow of their former self. Bitcoin can’t decide whether to stay above or below $40,000 and the public’s attention seems to be waning.
As a result, Coinbase’s stock price has practically dropped to its all-time low. The value has fallen more than 60% since its launch a year ago, and shares are now trading at around $147.
The competition takes steps
The performance of the crypto market is the main culprit for this, but it is not everything. So Coinbase would get rid of it very easily. Over the past year, significant global competitors have emerged, both globally and in the US and other markets.
Think of the growth of FTX and Crypto.com. With all their patronage, it’s quite possible that normal consumers know these brands better than Coinbase does now. Furthermore, Binance remains the largest crypto exchange.
In many stock markets, investors can opt for ETPs/ETFs that provide investors with access to crypto exposure through traditional avenues.
Others, such as private investors, have poured money directly into the crypto market, preferring to seize their opportunity through direct market exposure rather than traditional financial avenues. In other countries, local players are often in charge, such as the BLOX trading app in the Netherlands.
Fundamentally still strong
Coinbase’s poor performance in recent months may be cause for concern, but it by no means means the end of Coinbase’s great promises.
As we mentioned, the value of shares is closely related to the performance of the cryptocurrency market. As fast as it can crash, that’s how fast cryptocurrency prices can skyrocket. If this interconnection continues, there is a good chance that Coinbase will make new highs during the next bull rally.
Furthermore, the fundamentals of the company remain strong even during these times. Coinbase made a profit of $840 million in the last quarter of 2021.
The number of users continues to grow steadily. In the fourth quarter of 2021, there was a jump from 58 million to 89 million verified users.
Also, it is now possible to trade NFTs on Coinbase and this could attract even more users, if they can stand up to OpenSea.
Blown away by the SEC
There were also bad days for Coinbase. For example, the company wanted to offer an interest-bearing savings product, similar to Blockfi. Users would then put stablecoins and cryptocurrencies into a savings account to earn interest on them. The US financial watchdog SEC did not like this at all, so Coinbase tossed the plans on the shelf without a fight.