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It took exactly one month after bitcoin’s most recent all-time high to set a new one! The $61,800 mark was indeed broken during the course of yesterday, with the price reaching a high of $64,900 earlier today. What is most encouraging about this already positive news is that this action comes alongside a rise in the majority of altcoins’ ratios to bitcoin. As a result, we are truly seeing an injection of new capital into the market. This new global increase brings the total capitalization of the cryptocurrency market to $2.2 trillion. Bitcoin’s alone has reached $1.2 trillion. Bitcoin’s dominance continues to decline from its peak at the beginning of the year.
It is worth noting that the fund is currently 50% exposed to ETH, allowing it to generate higher returns than bitcoin for investors. The fund is obviously also reaching historic highs in terms of assets under management.
This will be a historic day in the cryptocurrency story book. Let’s give it the importance it deserves. Indeed, it is this April 14th, 2021 that Coinbase will officially go public. The shares will trade under the ticker COIN on the Nasdaq. The company has decided to go with a direct listing rather than an initial public offering. Until recently, this meant that the company could only offer its existing shares as opposed to the possibility of creating new ones. While this restriction was lifted by the SEC recently, Coinbase has already announced that it has declined to offer additional shares to those in today’s offering. The advantage of this route is that anyone will be able to trade shares on the company as early as this afternoon, generating tenfold potential interest from retail investors.
Shares of the 2012-founded company are expected to start trading mid-day. While the benchmark price released by Nasdaq is $250 a share, the opening is instead expected to approach the price of the most recent private market trades, $343.58 apiece. This is expected to be the largest U.S. tech offering since Facebook in 2012, with some predicting a valuation of up to $100 billion based on early private trading.
As this analysis from Decrypt shows, the company is already highly profitable. When Coinbase initially filed its Form S-1 with the SEC, it said it took home a $322 million profit in 2020, with over $1.2 billion in revenue. That was in February. Last week, the company announced profits between $730 and $800 million on revenue of around $1.8 billion in Q1 of 2021 alone. The fact that it’s turning a profit at all means it’s doing better than a lot of tech unicorns like Uber, Lyft, DoorDash, and Snap—and that’s why many analysts say the stock will be a hit.
An implied valuation of $100 billion would make Coinbase one of the largest exchanges in the world, competing with the New York Stock Exchange. Needless to say, the early action will be followed with major interest, and by all stock market investors.
While exchange-traded fund projects are still struggling to get regulatory approval in the United States, the concept is proving to be a success on our side of the border. In fact, in less than two months of existence, bitcoin ETFs already have $1.3 billion under management.
Projects marrying gold as a historical hedge asset with emerging cryptocurrency technology have been numerous over the past decade. They have all enjoyed limited success, to say the least. Yet, the next one to emerge could be different, at least if the capital supporting it is any indication. Indeed, real estate tycoon Kent Swig has secured $6 billion in physical gold to support his upcoming cryptocurrency. The DIGau token will be pegged to the market price of the precious metal, backed by the company Dignity Gold.
“Gold was one of the original rock-solid backings of all currencies,” Swig, 60, said in an interview. “We’re not reinventing the wheel here. What we’re doing is applying the world’s stable backing of a lot of things to a very advanced technology.”
In short, he intend to create a stablecoin pegged to gold rather than a fiat currency. A competitive advantage of the latter is that it will pay a dividend to its holders. There would be something ironic about a blockchain-based gold derivative potentially driving the gold asset market!
Not a week goes by without a paragraph of this communication being reserved for Michael Saylor and his company, MicroStrategy. The latter made headlines this week with the announcement that its board of directors would now be paid in bitcoins. In approving the change, the board cited its commitment to bitcoin, “given its ability to serve as a store of value, supported by a robust and public open-source architecture, untethered to sovereign monetary policy.” Speaking of being paid in bitcoins, renowned financier and Squawk Box host Jim Cramer announced this week that he would be quite open to being paid in bitcoins. “Absolutely,” he said. “In fact, I might demand it.”
What can we say about the technical picture when many of the major cryptocurrencies are in the discovery zone above their historical highs. So let’s just point out that the momentum shows no signs of slowing after the consolidation of the past month. Indeed, bitcoin futures open interest is hitting a new all-time high. Moreover, the oscillators are not in the red as they were a month ago. According to the RSI in particular, the price could reach more than $90,000 in April alone if we were to reach the levels of the 2017 madness.
Rivemont Investments, manager of the Rivemont Crypto Fund.
The presented information is as of April 14th, 2021, unless otherwise indicated and is provided for information purposes only. The information comes from sources that we believe are reliable, but not guaranteed. This statement does not provide financial, legal or tax advice. Rivemont Investments are not responsible for any errors or omissions in the information or for any loss or damage suffered.
