Bitcoin hits MORE record highs as it soars by 2.5% to £46,665

Bitcoin hits MORE record highs as it soars by 2.5% to £46,665 with Coinbase set to become first major cryptocurrency firm to list on stock market today

  • Digital currency rises 2.5% to $64,211 (£46,665) today after a 5% gain yesterday
  • It’s now up nearly 1,000% in a year, a return that far outstrips stock market gains
  • Began 2021 at $29,000 (£21,000) and was at $6,800 (£4,900) this time last year
  • Coinbase today becomes first major crypto-currency firm to list on stock market

Bitcoin has hit a new record high today as it extended its rally this year ahead of a listing by the world’s largest crypto-currency exchange.

The digital currency rose 2.5 per cent to $64,211 (£46,665) this morning and is now up nearly 1,000 per cent in a year – a return which far outstrips stock market gains.

Yesterday, Bitcoin rose 5 per cent which beat the previous peak in March. It began 2021 at about $29,000 (£21,000) and was at $6,800 (£4,900) this time last year.

It comes as Coinbase today becomes the first major crypto-currency company to list on the stock market in a test of investor appetite for other start-ups in the sector.

Bitcoin, which is the world’s biggest crypto-currency, is created using computer code

Coinbase today becomes the first major crypto-currency company to list on the stock market

It is set to list on the Nasdaq in the US valued at £772million. Coinbase is understood to have been used by Tesla in its recent acquisition of £1billion worth of Bitcoin.

Nick Spanos, co-founder of blockchain platform, said: ‘The upcoming public debut of Coinbase is particularly exciting to both the mainstream market investors as well as crypto market enthusiasts.

What is Bitcoin and why has it risen so much? 

Bitcoin, the world’s biggest crypto-currency, hit a record of over $63,000 yesterday and went up further today. 

The value has more than doubled this year as large investors, banks from Goldman Sachs to Morgan Stanley and household name companies such as Tesla warm to the emerging asset. 

Bitcoin is an online type of money which is created using computer code.

It was invented in 2009 by someone calling themselves Satoshi Nakamoto – a computer coder who has never been found or identified themselves.

Bitcoins are created without using middlemen – which means no banks take a fee when they are exchanged.

They are stored in what are called virtual wallets known as blockchains, which keep track of your money.

One benefit is that it can be used to buy things anonymously. However, this has left the currency open to criticism and calls for tighter regulation.

‘They are excited as Coinbase will open the gates for more conservative investors to embrace the coin, and perhaps other digital assets.’

And Ipek Ozkardeskaya, a senior analyst at Swissquote, added: ‘Coinbase’s debut will mark the first official juncture between the traditional financial avenue and the alternative crypto path.

‘A successful addition to Nasdaq should act as endorsement of cryptocurrencies by traditional investors.’

Other major institutional investors have started investing in Bitcoin over the past year. Goldman Sachs and Morgan Stanley are close to offering digital assets to clients.

But sceptics argue that digital coins have been inflated by stimulus that has also sent stock markets to record levels.

And global regulators are stepping up their scrutiny, while warning investors to stay away from the asset class.

Earlier this year Bank of England Governor Andrew Bailey warned that investors in Bitcoin had better be prepared to lose all their money.

Mr Bailey believes Bitcoin is similar to gambling and has the same level of risk.

Founded in 2012, Coinbase boasts 56million users globally and an estimated $223 billion assets on its platform, accounting for 11.3 per cent crypto asset market share.

The listing of Coinbase on the Nasdaq today will mark a milestone in the journey of virtual currencies from niche technology to mainstream asset.

The listing is by far the biggest yet of a cryptocurrency company, with the San Francisco-based firm saying last month that private market transactions had valued the company at around $68billion (£49billion) this year, versus $5.8billion (£4.2billion) last September.

PAST WEEK: Bitcoin increased by 2.5 per cent to $64,211 (£46,665) today after a bumper week

2021 SO FAR: The value of Bitcoin has shot up having begun the year at $29,000 (£21,000)

SINCE START OF 2020: The crypto currency was trading at $6,800 (£4,900) this time last year

It represents the latest breakthrough for acceptance of cryptocurrencies, an asset class that only a few years ago had been shunned by mainstream finance.

William Cong, an associate professor of finance at Cornell University, said: “The listing is significant in that it marks the growth of the industry and its acceptance into mainstream business.’ 

Meanwhile global stock markets pushed to record highs today as bond yields eased, after data showed US inflation was not rising too fast as the economy reopens.

With fears receding for now that a strong inflation reading might endanger the Federal Reserve’s accommodative stance, European shares opened slightly higher.

Gains were capped after Johnson & Johnson said it would delay rolling out its Covid-19 vaccine to Europe, after US health agencies recommended pausing its use in the country after six women developed rare blood clots.

Led by Hong Kong’s Hang Seng, most Asia-Pacific share indexes also climbed. Benchmark US Treasury yields continued to fall, marking a fresh three-week low. 

ALEX SEBASTIAN: Coinbase’s IPO is a landmark meeting between traditional finance and its new blockchain based rival: Is it the best of both worlds or an unholy union?

Coinbase is many people’s first point of contact with the world of cryptocurrency, particularly in the UK and America.

The exchange makes it’s much anticipated debut on the Nasdaq today and is expected to see strong demand initially. The deal comes at a particularly opportune time, with Bitcoin yesterday breaking back through resistance at $60,000 to reach a new all-time high of over $63,000.

Notably it will be a direct listing, which means current owners of privately held shares in the company will start selling them straight to buyers in the public market. The usual order book build and underwriting of the deal by investment banks seen in most IPOs has been forgone.

Coinbase will float on the Nasdaq this week after revealing it booked revenue of $1.8bn in just three months

The float represents a tantalising opportunity for investors who don’t want to, or for regulatory reasons can’t, hold Bitcoin and other crypto assets themselves but would like to invest in the burgeoning sector.

The numbers certainly look good on the face of it. Coinbase said it expects first quarter revenues of $1.8bn with net income of $730m to $800m, generated by a colossal 56million verified users.

The emergence of Bitcoin as ‘digital gold’ has become widely accepted. The asset is sitting on the balance sheet of the world’s biggest car company by market cap, Tesla, while the City and Wall Street are increasingly embracing crypto assets. 

While volatility and sharp price corrections along the way are near guaranteed, Bitcoin and crypto in general are here for good as a financial asset. There will be no putting the genie back in the bottle. 

The remaining die-hard critics who consider it worthless and destined to ‘go to zero’ likely don’t understand the economics, technology and social consensus effect that now underpins it.

There is exciting potential in other crypto assets and blockchain technology as well, with the rising ‘DeFi’ (decentralised finance) industry on the Ethereum network of particular note.

For many the Coinbase IPO represents the classic ‘selling shovels in a gold rush’ play. That is to say, providing the tools to acquire an asset in demand is more lucrative than buying the asset itself.

There is certainly logic in this. Coinbase makes money whether the price of Bitcoin goes up or down. All it needs is people buying and selling as its revenues come from taking a small percentage of each trade, as well as various other fees from every user.

Clearly, the crypto market going up is better for exchanges like Coinbase as it brings in more new customers, but the firm also reels in plenty of money during a downturn.

The argument against investing in Coinbase shares appears to rest on three key factors. Firstly, there is the perennial IPO concern: has the company chosen this time to go to the market because it believes things are at a peak in terms of their fortunes, and are unlikely to get better in the short term?

To the moon: Tesla and SpaceX boss Elon Musk is one on Bitcoin’s most famous advocates

With Bitcoin at a fresh all-time high this week of over $63,000 you could certainly make the argument Coinbase’s current private shareholders will be cashing out at a good time.

Another key criticism that could be levelled at the deal is that it is neither one thing nor the other. 

It’s not a typical equity investment because the company’s fortunes are so intertwined with nascent cryptocurrency markets, and typical comparisons for key things like earnings versus share price multiples are not available.

It will be very interesting to watch how closely Coinbase shares correlate with the Bitcoin price over the coming couple of years.

Neither is it a pure play on Bitcoin and other crypto assets. To a large proportion of Bitcoin and blockchain’s advocates, the main reason they value and believe in it is that it’s forging a new separate path for finance away from the traditional markets and established monetary system.

Buying stock market-listed securities in a cryptocurrency company seems like a contradiction to some, or even hypocrisy.

The third of the issues is regulation. Coinbase has already had a brush with the SEC which delayed the IPO and triggered a $6.5m settlement over claims it was reporting transactions incorrectly.

You can be sure the financial watchdogs will continue to keep a very close eye on Coinbase during the early years of its life as a publicly listed company. Any transgressions are likely to be financially costly.

But if you are a firm pulling in revenues of nearly $2bn a quarter, you can afford to pay a few chunky fines.

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