Bitcoin’s massive rally in 2017 is probably one of the most famous speculative bubbles in recent memory. After a stock market crash earlier this year, the latest FOMO craze has been buying beaten-up equities, with a particular penchant for bankruptcy. As those companies have struggled recently, the tech sector has forged ahead.
Companies like Nikola (the EV company that has yet to sell a car) have seen enormous gains, while established giants like Amazon and Apple are trading at record highs despite record unemployment claims in the United States. Enter Coinbase. As the largest and most recognizable cryptocurrency exchange, it has found the right time to IPO.
When trading legends like billionaire Paul Tudor Jones have purchased bitcoin as an inflation hedge, how hard is it to imagine that more pension funds want a coin or two? Especially with almost every major central bank printing money like there’s no tomorrow.
Given bitcoin’s limited liquidity, the prospect of higher transaction volume would be great news for Coinbase. Bitcoin is an easy proposition to sell, and so is Coinbase. That’s why the FOMO could get crazy.
Existing demand is likely why Coinbase is not going through a traditional IPO. Instead, the exchange is diving straight into the market via a direct listing.
Behind the scenes, is there another explanation for the rush to IPO? It could be that indicators are starting to suggest that the economic sugar rush has peaked and its cash-out time for insiders.
In the meantime, let’s see how crazy things can get for Coinbase’s stock. Armchair investors, get your popcorn ready.