Coinbase goes public on the Nasdaq Global Select Market today, marking the dawn of a new era for the cryptocurrency ecosystem. Market analysts and industry experts have maintained that through Coinbase, the cryptocurrency industry will attain a more mainstream exposure.
Wedbush Securities analyst, Dan Ives noted that Coinbase’s public market debut is “potentially a watershed event for the crypto industry and will be something the Street will be laser focused on to gauge investor appetite,” as reported by CNBC.
The excitement in the market in which this is playing a huge role has pushed the top cryptocurrencies to new all-time highs.
“It’s going to legitimize a lot of what these companies are doing,” Marcus Swanepoel, CEO of London-based crypto platform Luno, said of the Coinbase debut. “For one, it’s going to show just how big the industry is and how much it’s growing.”
However, the close ties Coinbase has with the broader digital currency market gives experts a case study to call for caution. Coinbase in its first-quarter report for 2021 also acknowledged that negative storms in the cryptocurrency market can adversely affect its business outlook.
While maintaining 6.1 million Monthly Transacting Users (MTUs) at this time, the company projected that for the rest of the year, a growing positive sentiment in the market can pus its MTUs to 7 million, 5.5 million for when the market is seeing a normal growth and 4 million if the market takes a hit.
Part of the uncertainties that bedevil the cryptocurrency industry is in the aspect of regulations and per the CNBC report citing Stéphane Renevier, an analyst at financial education platform Finimize, this may also affect Coinbase in the future.
“Regulatory risk is high because crypto platforms are currently not subject to the same rules as traditional exchanges or trading platforms are,” he said, adding “Some of Coinbase’s activities (such as some of its prime brokerage services and its use of its own capital to trade) might be subject to tighter regulatory oversight in the future. Given that the regulatory landscape is evolving extremely rapidly, the company is always at risk from a change in status, which could impact some of its most profitable activities.”
While still new as a Nasdaq-listed company, Coinbase investors and shareholders will need to adjust to the extreme volatility in the cryptospace which can affect the trading platform’s stocks.
