Coinbase files to go public, NFTs, and Cathie Wood on Bitcoin

Hey Redpill Readers!

Coinbase filed their S-1 for the big IPO, non-fungible tokens are making waves, and ARK Invest’s Cathie Wood thinks Bitcoin could replace bonds.

We've got all of that and a lot more below.

Let’s get this started.



COINBASE IPO? HERE’S WHAT INVESTORS SHOULD KNOW

Coinbase is doing a direct listing that would value the company at $100 billion. 

And that, my friend, is a lot. That would be the largest valuation on a private tech company since Facebook went public in 2012. 

With Bitcoin up over 600% since the beginning of last year, the decision for crypto exchanges was easy – go public. 

And look, it’s not just Coinbase:

  • Bakkt, a crypto exchange backed by Microsoft, is going public via a SPAC, VPC Impact Acquisitions Holdings ($VIH)

  • Gemini and Apifiny, two other crypto trading platforms, have also announced plans to go public in the near future

Coinbase Releases Public S1: It’s official, folks. Coinbase just released their much-anticipated public S1 filing. But what’s that exactly? 

A registration document. 

And it should clear the way for them to list their stock on public US equity markets. 

The end game? Coinbase intends to list its Class A common stock on the Nasdaq Global Select Market under the ticker symbol ($COIN). 

And the listing will likely happen within the next few weeks. 

Here’s what you need to know about the filing:

  • Demand? You bet. Look no further than institutional volume. It’s rising fast.

  • Also, 21% of retail users engage in at least one non-investing product like borrowing, lending, staking, or other protocol participation (a promising sign for the world of decentralized finance, or DeFi, for short)

  • Coinbase’s revenues are predominantly from its transactions or trading-based segment, accounting for 85% of revenues in 2020.

  • Like Microstrategy and Tesla, Coinbase says it also holds bitcoin (BTC) as an investment on its balance sheet.

THE TAKEAWAY

Coinbase raked in $1.27 billion in total revenue in 2020. That’s more than double its $483 million net revenue the previous year, with a net margin of 25%.

And it doesn’t stop there…

Because the company said it has 43 million verified retail users on its platform, 2.8 million of which make monthly transactions.

How many institutions are on board? Roughly 7,000 institutions!

Furthermore, when Coinbase officially goes public, some of its investors and executives are going to get super wealthy. And it will start with CEO Brian Armstrong, who took home nearly $60 million in compensation last year. 

But get this, his 21% stake in Coinbase could be worth north of $20 billion if the company reaches its rumored $100 billion valuation

Other key figures to profit? Co-founder Fred Ehrsam and venture funds Andreessen Horowitz, Union Square Ventures, Ribbit Capital, and Tiger Global.

Moving on…


NON-FUNGIBLE TOKENS (NFTs) - A NEW TYPE OF DIGITAL ASSET

Haven’t heard about non-fungible tokens (NFTs) yet? 

They’re the new hot trend in crypto, and some of its leading players are starting to post extremely impressive revenues

NFTs have exploded in popularity... In fact, during this pandemic, investors have scrambled to spend big money on items that only exist online.

“Non-fungible” refers to items that cannot be exchanged on a like-for-like basis. 

In other words? Each one is unique. 

On the flip side, there are “fungible” assets like dollars or bars of gold.

So, what makes all this work? You guessed it… the blockchain.

Blockchain technology allows the items to be publicly authenticated as one-of-a-kind, unlike traditional online objects which can be easily reproduced or faked.

Here are the deets of one deal: NBA Top Shot, a blockchain-based platform, lets users buy and sell officially licensed NBA collectible highlights known as “Moments.” 

And so far, it’s doing pretty well.

It has generated over $205 million in total sales since going live less than six months ago.

THE TAKEAWAY

But here’s the crazy part... 

According to crypto tracker CryptoSlam, Top Shot has done over $187 million in sales over the past month, a massive rise of 1,197% compared to the prior 30-day stretch.

What’s more, this traction could be just the start. 

NBA Top Shot creator Dapper Labs has reportedly begun talks with retired NBA players to secure rights to historical highlights. 

What’s next? Well, our firm believes they’ll expand their product to other major professional sports... such as the NFL and MLB. But time will tell.

Next up...


‘BITCOIN MAY REPLACE BONDS,’ SAYS CATHIE WOOD 

Bitcoin should be considered a new asset class, one that may even serve as a reserve currency in the future, ARK Invest’s Cathie Wood recently stated.

You think about the traditional 60/40 stock-bond portfolio, but look what’s happening to bonds right now,” she said.

If we are ending a 40-year secular decline in interest rates, that asset class has done its thing. What’s next? We think crypto could be the solution,” said Wood.

But first…

In case you don’t know...

Cathie Wood is the CEO of exchange-traded funds… funds based on disruptive technologies like artificial intelligence, blockchain, robotics, 3D printing, and more. 

As Wood spoke at a virtual conference by Bloomberg, bonds continued to sell off.

Economic expectations? Savvy investors and traders are expecting higher inflation this year (as the economy tries to make a comeback).

But here’s the problem: Inflation would erode the value of bonds that have already been issued. The Federal Reserve (and other central banks) have pledged to support global economies by buying bonds for as long as it’s needed…

In simple terms: It’s a policy that has helped Bitcoin (BTC) gain in value.

We know there’s a concern given all the quantitative easing and the no-rules based monetary policy out there. Fixed income has done 40 years of really hard work,” Wood said. “If Bitcoin represents a new asset class, why not invest in it?

And we agree - why not? Bitcoin really could replace bonds. She’s right.

THE TAKEAWAY

Saving the best for last…

Wood clarified that she still thinks we’re in a deflationary environment… and not an inflationary one. Why, you ask? Because “technologically enabled innovation and creative destruction” brings prices down. 

That’s something many economists (and talking heads) on the mainstream media, simply do not grasp. But the truth is, technology is deflationary.

Of course, it will take years for technology to roll out… but it’s happening. And it’s happening faster than any of us ever imagined.

MORE REDPILL CRYPTO NEWS


DISCLAIMER: Newsletters published by Redpill Crypto Research reflect the opinions of only the editors who are associated persons of the firm and do not reflect the views of anyone else. They are meant for informational purposes only, are not intended to serve as a recommendation to buy or sell any security in a self-directed account with Coinbase Inc. or any other account, and are not an offer or sale of a security. All investments involve risk and the past performance of a security or financial product does not guarantee future results or returns. Cryptocurrencies and digital assets are speculative and highly volatile, can become illiquid at any time, and are for investors with a high risk tolerance. Investors could lose the entire value of their investment.

Redpill Crypto Research will have no liability whatsoever for any expenses, losses (both direct and indirect) or damages arising from, or in connection with, the use of information in this newsletter. Readers are encouraged to conduct their own research and due diligence, or obtain professional advice, prior to making any investment decision.© 2020 Redpill Crypto Research. All Rights Reserved.

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