1. Crypto Long & Short: Coinbase Going Public Isn’t Selling Out — It’s the Start of a Long Game
With its Nasdaq listing, the exchange will provide on-ramps for many investors. But it’s also changing the system from within.
After a dramatic week in which the crypto industry’s eyes were on Coinbase’s Nasdaq debut, it’s time to step back and reflect. Plenty of pixels and airtime has already been beamed. Plenty of analysis has been performed about the valuation and growth outlook. But not enough has been said about what I think is the long game.
Some have wondered if Brian Armstrong, Coinbase’s CEO and co-founder, is “selling out” by going public. A business that was built around an asset group created to eliminate the need for centralized gatekeepers ends up joining the centralized system. How could he?
I don’t think Coinbase going public is contradictory at all. Look deeper, and you see a strategic move to influence the system from within.
2. Bitcoin Price Falls $8K to 3-Week Low, Altcoins Crash
Bitcoin nosedived to a three-week low of $52,148 during Sunday’s Asian hours.
Bitcoin nosedived to three-week lows early Sunday, puncturing the frenzied speculative bubble built into several alternative cryptocurrencies (altcoins) in the wake of Coinbase’s recent debut on Nasdaq.
The biggest cryptocurrency by market value dropped from roughly $60,000 to $52,148 in 15 minutes during the Asian session, liquidating almost $4 billion worth of positions in the derivatives market, according to Messari’s Ryan Watkins.
While the exact reason for the sudden crash is unknown, the market mood may have soured due to rumors that the U.S. Treasury is planning to charge several financial institutions for money laundering using cryptocurrencies.
In addition, CNBC last night tweeted as new a month-old report on India preparing to possibly ban cryptocurrencies in the country. That month-old report was based on a Reuters story citing an unnamed government official.
Several news services treated the CNBC report as new, possibly contributing to the selloff as fears that the partial crypto ban in Turkey announced late last week may be spreading. A message to CNBC has yet to receive a response.
At press time, bitcoin (BTC, -3.95%) is changing hands near $54,000, representing a 12% drop on a 24-hour basis, while ether (ETH, -1.53%), the second-largest coin is down almost 13%.
Other altcoins such as XRP (-4.42%), polkadot, litecoin (LTC, -4.45%), bitcoin cash (BCH, +5.91%) have 17% to 20% in the past 24 hours, while dogecoin (DOGE, +9.3%) is nursing a 6% loss.
Payments-focused XRP and meme cryptocurrency dogecoin recently saw huge retail-led price rallies as Coinbase’s hotly-anticipated listing on Nasdaq on April 14 created general euphoria around the sector.
Bitcoin rallied above $60,000 in the days leading up to Coinbase’s listing and clocked a record high of $64,801 on April 14.
3. Mix of Old, Wrong and Dubious ‘News’ Scares Rookie Investors, Fuels Crypto Selloff
Investors had already had a weak appetite for risk thanks to the coming partial ban on crypto in Turkey.
Call it the recipe for perfect market meltdown:
Take a dubious tweet about an unconfirmed U.S. investigation of financial institutions using crypto to launder money, a report that doesn’t appear to have come from Bloomberg, Dow Jones, Reuters or any other reputable news service.
Take that tweet and sprinkle it throughout the cryptoverse. Shake vigorously.
4. Coinbase CEO Sold $291.8M in Shares on Opening Day
The amount represents roughly 1.5% of his holdings.
Coinbase insiders and early investors sold about $5 billion in shares in total during the leading cryptocurrency exchange’s first day of trading on the Nasdaq earlier this week, according to series of filings made Friday with the U.S. Securities and Exchange Commission (SEC).
CEO Brian Armstrong sold 749,999 shares in three batches at prices ranging from $381 to $410.40 per for total proceeds of $291.8 million, according to one filing. While a Coinbase representative declined to comment due to the company being in a so-called “quiet period,” based on filings made before the listing, it would indicate Armstrong sold about 1.5% of his stake.
In another SEC filing, it was disclosed that Coinbase director and venture capitalist Fred Wilson sold 4.70 million shares for proceeds of $1.82 billion. While it’s not clear how much of Coinbase Wilson still holds, he’s listed on the filing as a holder of at least 10% of the shares of Coinbase, which has a market cap of $63.6 billion.
Union Square Ventures, the VC firm led by Wilson, sold $4.70 million shares from its 2012 fund for proceeds of $1.82 billion, according to another filing. The fund is also listed as a 10% owner of Coinbase shares.
Together, the sales by Wilson and his firm’s fund accounted for more than two-thirds of the $5 billion worth of shares sold.
Software engineer and venture capitalist Marc Andreessen, who is a Coinbase director as well as a holder of more than 10% of the exchange’s shares, together with his firm Andreessen Horowitz and two associated entities sold a total of 1.18 million shares for $449.2 million, according to various filings (here, here, here and here).
An important thing to keep in mind is that selling by insiders was sort of the whole point of Coinbase’s direct listing; it’s where the shares were supposed to come from. The only thing new here is exactly who sold what and for how much. For, unlike an initial public offering in which new shares are issued by the company with the proceeds going to its treasury, in a direct listing, the public is only offered existing shares that are held by insiders.
Even though a company gains no proceeds from a direct listing, it does benefit in other ways. In addition to allowing insiders to profit, a direct listing is a tremendous PR event and, more tangibly, vastly broadens the pool of holders while enabling the company to more easily raise capital in the future. As Noelle Acheson, CoinDesk’s director of research, put it so well “A direct listing is a liquidity event; an IPO is a capital-raising event.”
5. If Bitcoin Starts Closing Below the 50-Day SMA It May Mean Deeper Pullback Ahead
“The loss of bullish momentum is only short-term in nature,” one chart analyst said.
Bitcoin fell sharply on Sunday, dipping well below the 50-day simple moving average (SMA) support for the first time in six months.
While the decline looks typical of a bull market correction, it could be extended further if prices find acceptance under the 50-day SMA, according to one analyst.
“The loss of [bullish] momentum is only short-term in nature, but we would view consecutive closes below the 50-day SMA as a reason to move to the sidelines,” Katie Stockton, technical analyst and managing partner of Fairlead Strategies told us.
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