In this article, Forrest Crist-Ruiz, assistant director of trading research and education at MarketGauge.com, considers the wide-reaching effects of the Coinbase IPO.
The Nasdaq 100 (represented by the Invesco QQQ ETF [QQQ]) has made new all-time highs ahead of Coinbase’s direct listing on 14 April.
Coinbase is currently the most popular exchange for buying cryptocurrencies and has attracted a large amount of popularity and hype before it releases, as market analysts throw out wildly different estimates ranging from $20bn to more than $100bn.
When it comes to new stock releases, from our perspective, the best plan is to wait for the dust to settle.
Without any prior trading history, highly speculative estimates can be fun to think about, but often do not have a good track record of helping position size for the unknown volatility that often takes place with a new listing.
It brings yet another level of legitimacy to the cryptocurrency space, which has gained a huge amount of momentum over the past six months.
Additionally, many banks have been working on creating infrastructure for cryptocurrencies and companies investing directly into Bitcoin.
There are also companies that are willing to accept payment in Bitcoin and other cryptocurrencies.
On top of several traditional banks that have already been working on creating infrastructure and services for cryptocurrencies, there are also banks emerging with the sole purpose of providing cryptocurrency and fintech services.
Because of this, Coinbase could give another boost to the tech sector, as it will be one of the first publicly traded companies that helps people buy cryptocurrencies.
Its further adoption paves the way for both new and existing tech companies to join the space, with increased demand for cybersecurity, computer chips, crypto banking, and transaction software.
This article was originally published on MarketGauge. With over 100 years of combined market experience, MarketGauge's experts provide strategic information to help you achieve your investing goals.