2021 is a roller coaster year for the crypto industry, Bitcoin (Bitcoin) Rose to a record high of US$65,000 in early April this year, and fell to the area below US$30,000 only a few months later. However, the moment widely regarded by many as a turning point in the industry-at least in terms of mainstream legalization-was Coinbase (COIN) Debut on NASDAQ through direct listing.
Until April 14th, the day of the above-mentioned listing, the reference price of COIN was set at $250. However, it is worth mentioning that the digital asset market was at an absolute apex at the time, so the COIN price rose sharply within a few minutes after its launch, soaring to $430.In other words, the price of the asset has continued to fall steadily thereafter. trading At a price point of around $242, the 90-day loss is about 40%.
The relatively weak performance of the coin is partly due to the bearish environment that has swept the market in the past few months. Since the stock listing, the total market value of the cryptocurrency market has fallen from US$2.1 trillion to US$1.28 trillion. However, despite this turmoil, many companies still have enough confidence to proceed and announce IPOs.
Not only that, venture capital and institutional funds Continue to inject funds into this areaFor example, data available online indicates that more than $17 billion has entered various companies operating in this market. In May alone, blockchain software company Block.one injected up to 10 billion U.S. dollars worth of digital assets and cash into the new cryptocurrency exchange Bullish Global. Similarly, hardware wallet manufacturer Ledger SAS was able to raise US$380 million from investors recently led by 10T Holdings.
Why is COIN falling?
As far as the current situation is concerned, COIN seems to operate between encryption and the stock market, that is, the product is a value ID based on encryption technology, but it cannot comply with the rules of the stock market. Antoni Trenchev, the co-founder of the crypto lending company Nexo, told Cointelegraph that the valuation of COIN is absolutely good, and that the asset is trending like any other similar stock, adding:
“When there is a problem in the business industry, the stocks of companies working in this field are often affected. After all, Coinbase’s IPO was conducted in April, when cryptocurrencies were still hovering at historical highs. Let’s not whitewash things, the market has already Fell sharply.”
Although Trenchev lacks obvious concerns about Coinbase’s stock performance, Kadan Stadelmann, chief technology officer of Komodo, a blockchain solution provider, believes that one of the biggest reasons for the decline in COIN is the rise of decentralized exchanges (DEX). In the most basic sense, DEX can be considered as a new type of decentralized finance or DeFi-based products, aiming to provide lower transaction costs and better market maker incentives.
On this issue, Stadelmann further emphasized that in the past, Coinbase focused its growth efforts entirely on the US market, which seemed to hinder the adoption of COIN, adding:
“However, with the recent announcement that Coinbase will start operations in Germany and expand recruitment in India, this situation has begun to change. These initiatives are promising, but even with sufficient resources, other crypto companies have already established new markets for their products. It also takes time to build a business.”
Trenchev also believes that just because Coinbase’s stock is publicly traded does not mean it has entered mainstream investors. In other words, he believes that the positioning of the exchange is very suitable to use the river of public investment. “The secret ingredient missing at the moment is time. It takes time for mainstream investors to familiarize themselves with the crypto industry before they can confidently invest their money in companies such as Coinbase. In this sense, COIN has not yet seen the influx of investors,” he added.
Are traditional investors still a little wary of encryption?
Regarding why so many investors are still unsure about the idea of COIN and other cryptocurrency-related products, Red, the community moderator of Harvest Finance, a decentralized income agricultural aggregator, told Cointelegraph that when it comes to traditional markets, investors are still concerned about cryptocurrencies. Related products are confused. The volatility and endurance of the market, adding: “Although Coinbase is very innovative in many aspects and is a market leader, if the traditional market is still uncertain about the underlying product, their COIN products are likely to suffer the same negative sentiment .”
In addition, as regulators continue to pay more attention to this area, mainly by trying to implement various financial “safeguard measures”, Red believes that more and more centralized entities will seek to ensure that their asset issuance is fully compliant: The listing process helps them to get in touch with the above-mentioned regulatory agencies and legal entities. “
In this matter, Ganesh Swami, CEO of blockchain data analysis company Covalent, told Cointelegraph that the next wave of encryption adoption will be a by-product of all the overall regulatory developments currently taking place around the world. He further emphasized:
“We must promote the benefits of DeFi and Web 3.0 to regulators in order to formulate regulations that will help us build a decentralized future together. With the emergence of compliance tools such as encrypted ETFs and KYC-supported DeFi products in the United States and Canada, different The regional regulatory framework has a unique opportunity to strengthen and join this force.”
The future trend of crypto companies going public?
Although Coinbase’s stock price movement failed to impress people, the company has opened up a unique path for the development of crypto-native platforms. As a public company, the company now needs to disclose various information about its business operations, which over time will help cultivate more trust in the crypto market.
On this issue, Trenchev believes that as the regulations surrounding the encryption industry continue to become clearer, it will be easier for blockchain native companies to play a role in the traditional financial sector, and IPO is likely to become a common corporate strategy for most people. The main cryptographic entity at some point in the future.
Finally, Joshua Frank, the co-founder and CEO of the encrypted data company The TIE, told Cointelegraph that although given the current situation, there are not many non-encrypted companies making large-scale acquisitions in the traditional market, but if large encryption companies want to move They need to go public: “In the next few years, we will definitely see a large number of public offerings.”
The list is already growing rapidly
In mid-July, Core Scientific, one of the largest Bitcoin mining businesses in North America, issued a statement stating that it had completed a $4.3 billion merger with Power & Digital Infrastructure Acquisition Corp, a special purpose acquisition company (SPAC). therefore, Core will now be added to a small list Publicly traded Bitcoin mining companies located in the United States, including Riot Blockchain and Marathon Digital.
Similarly, Argo Blockchain, a UK-based public company focused on crypto mining, recently launched a process through which it seeks to apply for a US IPO.In this regard, the company’s registration briefing with the U.S. Securities and Exchange Commission (SEC) indicated that Argo is seeking Dual listings and initial public offerings American Depositary Shares.
Finally, when the Chinese regulator’s crackdown on its local cryptocurrency market caused the price of Bitcoin to stagnate near US$32,000, the global financial technology company Circle announced its decision Host the IPO It is expected that this will happen in the near future. After Circle merged with SPAC’s Concord Acquisition Corp, the company’s value was US$4.5 billion, and the combined entity is expected to be listed on the New York Stock Exchange before the end of this year under the ticker symbol CRCL.
In other words, whether it is a bear market or a bull market, the crypto industry has undoubtedly gained a lot of momentum. However, the question remains: How long will it take for the industry to gain a foothold in the traditional financial sector? Overall, the interest in investing in crypto companies is a positive signal for the industry as a whole, especially as more and more venture capital companies and funds continue to inject liquidity into this field, and crypto companies embark on IPOs route.