Finding the best crypto exchanges and possible initial public offerings (IPO) with Nikita Zuborev, BestChange senior analyst.
Since the turn of the year, there was talk of a Coinbase IPO, or initial public offering, with crypto enthusiasts excited on this direct listing. As the second-largest crypto exchange in trading volume, there was a lot of talk on what the valuation of Coinbase will amount to – finally, launching at nearly $60 billion in mid-April.
Touted as the largest IPO in history, this direct listing will not only contribute to Coinbase’s growth but the crypto ecosystem and market as well. However, direct listing IPOs are majorly a viewed as a short-term trading instrument with investors’ and quotations experiencing an “avalanche-like growth at the start of trading,” Nikita Zuborev, a chief analyst of Russia-based exchanger, BestChange said.
“We view IPO only as an instrument for short-term speculations,” Zuberov said. ‘Many opportunists can take part in the first weeks of trading, however, as a long-term instrument, Coinbase shares do not generate the same interest.
At the moment, the primary source of the exchange is trader’s commissions, which are determined by the volume of transactions, attractiveness of the exchange and value of the cryptocurrencies. Coinbase, Despite currently being an attractive and a high-volume trading exchange, the wild volatility experienced on cryptocurrencies makes it difficult to predict the future revenue, profit and valuation of the exchange.
One of the ways to predict the future valuation of the business is the future dividend payments policy to shareholders. According to Zuborev, Coinbase’s lack of dividend policy structure makes it difficult to predict any valuations of the company.
“Another significant minus when viewing the asset in long-term strategies is the dividend policy of the company — Coinbase did not pay dividends in the past and is not going to pay them in the future.”
A “Less Volatile” Alternative
Coinbase is also facing competition from traditional finance companies getting into crypto such as Visa and PayPal – already listed on the NYSE and NASDAQ. These companies are more attractive in long term investing as they too are actively working with cryptocurrencies. PayPal is working on introducing crypto payments to its millions of merchant stores, Visa is introducing the USDC stablecoin as a payment option and MasterCard is also moving in the same direction.
Plans to develop cryptocurrency divisions at Visa, MasterCard and PayPal also challenges Coinbase stock, $COIN, as the crypto share of choice for most investors.
“A part of investors ready to invest in cryptocurrency industry through the shares of classic companies will go into these assets,” Zuberov thinks. “Especially if we consider that their business is diversified by traditional financial instruments, and they are less prone to volatility and changes in the attractiveness of cryptocurrencies.”
Bitcoin Cease To Be The Center Of Gravity
Additionally, there’s a shift in the crypto market as investors move from Bitcoin (BTC) to other cryptocurrencies. As one of the leading aggregators, BestChange analyst stated the “preference of users for exchange direction is switching” to decentralized finance, popular as DeFi.
End users and traders are quickly learning the power of having decentralized systems and exchanges (DEXs) to carry out financial transactions. According to a BestChange analyst, the company is witnessing increased routing to DEXs as users look to “new systems of crypto lending, decentralized games, systems of betting and forecasting, decentralized synthetic actives and lots of other things.”
Moreover, you cannot overlook the effect of non-fungible tokens (NFTs) in the evolution of blockchain and crypto market.
Combining DeFi and NFTs aims to decentralize financial systems, maintain personal privacy and cement ownership of assets from corporations and governments.
“Practically, DeFi is a symbiosis of ideas of globalization and communism implemented with the help of high technologies,” Zuberov said.
New Crypto IPOs Coming Up?
Coinbase is the first to the party, opening up the way for more crypto exchanges to also look for public listing. At the moment, Bermuda-based Binance (largest crypto exchange in the world) and U.S.-based Kraken are the most likely exchanges to launch the next crypto-focused IPO. Binance hired Max Baucus, the former U.S. Senator for Montana and member of the Democratic Party, as an advisor showing possible plans for an IPO.
Kraken also looks as a possible candidate to launch the next IPO as the only large American crypto firm, alongside Coinbase. After Coinbase listing under the U.S. law, Kraken could follow through with the same method to get a direct listing on the exchnage.
“Kraken is the third one by the trading volume, and its work from the beginning in the USA jurisdiction in accordance with all norms and rules of regulators makes the exchange the next candidate for the upcoming IPO,” Zuberov concluded.
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