A highlight from How Will the Coinbase IPO Affect Bitcoin's Price?


So what's my take. I do subscribe to the ignore history at your peril point of view in general. However i think that this is a massively different time with a dramatically different set of circumstances from the fed side. There are no self imposed constraints at all on the monetary policy. They can run so even if they don't like bitcoin ownership. It's not imperilling. how they run. The dollar as gold was in the early nineteen thirties from the standpoint of perception of state power as well this would face an absolutely vicious response from many many. Legislators would be a very strange battle to pick. Although presumably the circumstances that would have someone pick this battle or more extreme than anything we're experiencing now than there is of course the practical consideration. How would you actually sees bitcoin from everyone who holds it. This is why centralized exchanges represent too many choke points. That could be very dangerous. Places to store your coins and finally there is the growing lobby of holders that is increasing in power. Right now it strikes me as pretty unlikely that many of the big institutions that have gotten themselves bitcoin exposure would go to the mat to fight something like this although i could be wrong if only from the standpoint of them being scared of the president of the state feeling comfortable seizing specific categories of financial assets by the time. Bitcoin is big enough for this. Even to be on the table that lobby will have grown enormously so all in all i think that regulation we don't like is a much bigger concern but it's still worth noting this day which brings us to part two of this brief. The former chair jay clayton was on cnbc last week. And had this to say quote where digital assets land at the end of the day will be driven in part by regulation both domestic and international. And i expect that regulation will come in this area. Both directly and indirectly this idea of government bannings government regulation and on the other hand environment. Are the main fudd floating around this time in this. Bitcoin cycle the question for me is what does this. Theoretical regulation look like a lot of the people who are sharing. This don't seem to want to get into that sort of detail. Now one interesting note on that front. The financial crimes enforcement network fincen has hired michael maziarz the former cto analysis as their new acting director the previous director kenneth blanco took the stance. That crypto doesn't need its own legal framework because it's just subject to existing regulations. So is this good or bad for the industry on the one hand chain analysis has few friends among. Bitcoin is especially the more privacy inclined. It is seen as a tool for the government and given how of chain alice's revenue comes from federal agencies. It's understandable why on the other hand at least shane alice's actually understands what crime and crypto looks like an doesn't look like it is their reports and analyses that are routinely used to debunk the crime fudd because they show just what a tiny percentage of overall crypto transactions are actually used for any sort of crime so perhaps having an extremely well versed person in. This role is a good thing time. I guess we'll tell last the today. Gb to etf for a very long time gray scale was the only public market way to get exposure to bitcoin. When that was the case gtc traded at a premium to bitcoin that premium got as high as thirty five percent in mid december that premium however has been collapsing and for more than a month. Gtc has actually been trading at a discount compared to bitcoin spot. Y the most likely answer is competition. There is an alternative similar in ospreys bitcoin fund. There's also now a slew of canadian actual bitcoin jeff's canada's bitcoin lifetime inflow streak has now actually hit twenty five days which bloomberg etf guy. Eric balchunas called quote an unprecedented feat. Many have speculated then that the only path forward for gray scale is to convert the bitcoin trust into an etf and today they confirmed that that is indeed the plan their blog posts starts first and foremost we wish to make clear. We are one hundred percent committed to converting btc into an etf they applied for etf's in two thousand sixteen in two thousand seventeen. Obviously no one has gotten a bitcoin. T.f approved in the us yet but the battle continues and this is just more evidence that twenty twenty one may be the year where we finally have a us. Bitcoin atf looking for the best way to unlock your cryptos. Liquidity next dot. Io is exactly what you need borrow. Against your digital assets. 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Visit the app store or google play to download or visit exodus dot com for more information without. Let's shift to our main discussion. The coin base. Ipo in its potential impact on the markets on thursday april first coin base announced that it would begin trading on nasdaq on april fourteenth under the symbol coin. By the way have no idea how coin was still available but that is a cherry cherry ticker anyways. The interpretation there is actually historic precedent to this question of coin base and markets specifically people have long debated or looked at whether it would have been better to hold bitcoin at various points or invest in coin base in early rounds to me actually get to the heart of one of the lesser disgust disruptions of bitcoin in the crypto space that followed which is the disruption of venture capital itself. One of the great twitter tropes that will always be successful is to remind people that bitcoin is the biggest startup in the last decade and it had no ceo no marketing and no venture capital. This is also one of the reasons that many have skepticism around. Vc backed coins. There are questions of where incentives and power lie. What's for sure. is that early. Investors in coins are going to make out. Like kings and queens. There was a story a week or two ago about how do is poised to make something like five hundred million dollars from their investment and they weren't even as early as some speaking of who was early coin base went through y combinator in the summer of twenty twelve y combinator currently ranks coin base as number seven on their list of top companies by valuation and exits blow airbnb. Door dash stripe crews instacart and dropbox in that order. Airbnb is currently trading around a one hundred twelve billion dollar market cap or so and coin basis anticipated to be right on their tail. But now let's talk about what coin base might do for bitcoin in the crypto markets. So there are two main schools of thought the bullish bearish so let's talk bullish. I three potentially bullish impacts mainstreaming whistle wedding exposure and on rams so in terms of mainstreaming. There is absolutely no denying that the simple fact of this company being a high flyer on the biggest economic stage of the world. we'll have a legitimizing impact on the space. As a whole people will be able to get exposure to crypto through stocks in a very traditional way. Sure they can buy. Gtc right now or a variety of mining related stocks but there's some reason that that sub optimal gbd's requires that you learn about the underlying asset. It only gives you exposure to bitcoin. Which i suppose for some could theoretically be a net negative or at least limit the appeal and once you do learn about btc you learn that. Historically there's been a premium then you. There is of course micro strategy but again that still requires an understanding of the underlying asset queen based doesn't take any of that. It is a growth technology company in the crypto space. The picks and shovels of this modern gold rush. It's been building for nine. Years is backed by some of the best known investors in the world. This is a mainstream investing opportunity for crypto in the stock market. But let's take that idea a step further. Let's say that you get curious about the crypto industry but haven't really spent that much time. Learning base is not only a great way to start but it could start your journey down the path to more learning. You watch the numbers. Go up you start paying attention to bitcoin in general a bit more you days where. Bitcoin is making a lot more than coin base and a few months. You notice that you would just been better putting your money into bitcoin. Then putting that money into coin base boom welcome to your new financial rabbit hole. A third bullish aspect of this is just the idea of on ramps right. There are many who are looking to the fact that the big juicy stock in the space is one where you can download the company behind it on your phone and buy into the market. In just a few clicks indeed part of what has made coin base such a juggernaut in the space is the simple ease of use especially compared to many other exchanges. If people do start paying attention to the stock it doesn't take a big leap and jumped to see people actually starting to put that thing on their phone and getting exposure to the market directly. But now let's talk about how coin bases. Ipo could actually be bearish. I does is actually a much more interesting story. it's easy enough to write the bullish version. But what about the bearish. The most obvious concern that people have is that maybe coin base provides sufficient exposure to the crypto market without having to hold underlying there is conceivably a category of people who want bitcoin crypto market exposure. Who feel it's important but who don't actually want to deal with the volatility of the space itself at least not directly. Gtc's more directly tied. Mining is more directly tied. An exchange stock could be just the ticket they want. This is especially true. The argument goes for investment committees of big risk averse type institutions. Who feel like they have to do something but are again worried. About volatility in this way coin base could suck liquidity away from bitcoin. What do i think about this thesis i. I do think that there is a footing happening where it's more dangerous to have no exposure to bitcoin than to have some exposure so to the extent that the setup required for this scenario of coin based sucking liquidity from actual spot bitcoin. I buy that. There is a pressure to have some type of exposure to the space. However that's about. As far as i agree with the concern. I just don't think that there's a huge category of people or institutions that fall into the space of. Bitcoin is too risky. But i have to do something in the industry. If you accept that you have to do something in this industry. It's likely because you've been looking at historic returns of bitcoin over a long enough period of time. Do you can't stay on the sidelines anymore. Volatility remember is highly short-term phenomenon especially for the big funds that had been driving this rally it seems very unlikely to me that short-term volatility is going to be so big an issue that keeps them away but interested enough to buy into coin base for individual retail investors. Who are on the bubble but still too nervous about actual crypto asset volatility. Frankly i don't hate them being in an adjacent acid instead. Those sort of weekends in crypto are actually huge contributors to volatility. They're the people who buy at the top and sell as soon as things start to get jittery at all so to me. Having them incubate their rabbit hole journey somewhere else could be a net positive. It's also worth noting that for people who wanna play in the space. Without actually having underlying exposure there have been cash. Settle bitcoin futures for years. So all in all i think. The bullish scenarios are far more likely. That said it's almost inevitable that will overstate the likely impact of bullish scenarios in the short term speaking of which one of the other areas that people are wondering about coin bases market impact is with other assets related to crypto exchanges. We've heard reports that crack and has been out fundraising at an extremely high valuation. Clearly trying to take advantage of that coin base momentum. I wouldn't be surprised if you see some amount of pomp of exchange tokens in the lead up as well. I also think you're going to see a lot more attention around the defied decks. Am space iceberg on twitter tweeted coined base. Ipo in two weeks around fifty one hundred billion dollar evaluation. How has every single amdex exchange token not undervalued. Laurie cirmac from the block. Responded claim base has one k plus employees has been around for five plus years. It's going to have a record breaking q one. In terms of users in revenue is servicing the largest corporate treasury bitcoin buys etc defy is still in its infancy and wop already at one third of coin bases valuation. The point being is that these things are perhaps not undervalued even given coin bases big potential valuation post listing for those paying attention to this amdex exchange token correlation. I would only caution that goes two ways coin basis looking like they're going to be sitting at a juicy valuation trading above one hundred billion if the market decides at that's nuts however in too high and people are correct in thinking there will be a correlation between how joint base valued and other exchange assets. Valued the inevitable. Dump could become a new anchor on those valuations just as easily as it could become a pump on their valuations in the lead up. We're going to have a lot more information about point basis q one tomorrow. They're going to be reporting. That was forward looking guidance. And depending on the timing on include that as part of the brief overall there is a lot of press a lot of attention wall street journal story today as well about how to of coin bases supposedly independent board members. Fred and fred. Wilson aren't really that independent owning eight point. Nine percent eight point one percent of voting power respectively which is below but just barely the rule on ten percent for an independent board member in either way like. I said there is just a lot of attention on this space. It's going to be one. Of the seminal events one way or another in the bitcoin crypto space this year. So get your popcorn and settled back into your seats because the historically bullish april has this big huge event right in the middle of it anyways guys. I hope your week is off to a great start. I appreciate you listening. And i hope you had a wonderful easter slash spring weekend until tomorrow be safe and take care of each other piece.

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