Most of the investor interest in cryptocurrencies has historically been “concentrated in the digital tokens,” according to an update shared by Anthony Pompliano, an entrepreneur focused on Bitcoin, business, finance, and technology.
According to the update, retail investors were “first to the party, followed by family offices, corporations, and financial institutions.”
As stated in the market report, the big hope from many is “that nation states will be the next big shoe to drop in the adoption curve.”
At the same time that adoption “was sequentially moving from small accounts to large accounts, capital allocators were also moving horizontally through the market as well.”
The report claims that first, investors “were buying Bitcoin, then Ether, and now a plethora of other crypto assets that push them further out on the risk curve.”
These are all digital tokens though, the update clafified.
One of the areas that “crypto investors” seem to always leave as an afterthought is “the public equities involved in the crypto market.”
For example, Alyssa Choo from Bitwise pointed out this week “that 2023 continues to be a good year for crypto equities.”
- Coinbase $COIN: +263% YTD
- Riot Platforms $RIOT: +274% YTD
- Marathon Digital $MARA: +260% YTD
- Galaxy Digital $GLXY: +114% YTD
The first three companies on this list “have more than doubled the return of bitcoin year-to-date. While true, these results are not necessarily reflected in the public narrative at the moment.”
The update also mentioned that “the recent past results are not necessarily indicative of future performance. Some investors are bearish on the ability for a crypto-native firm like Coinbase to succeed against a litany of traditional financial firms competing for customers and assets. Maybe these bears are right, maybe they aren’t. Predicting the future is hard,” the update stated.
A narrative that is forming around Coinbase specifically is “that the company’s stock price will hit $1,000 during the bull market.”
If you search Twitter/X for “$COIN $1000” you will “see many different accounts all but predicting this milestone as an eventuality.”
Pompliano acknowledges that he has “no clue what will happen, and predicting the future is very hard, but let’s take a look at what it would take for that milestone to be achieved.”
Juan Leon from Bitwise broke down the financials of Coinbase and “extrapolated the metrics needed to drive the ~8x share price increase to reach $1,000.”
Juan wrote:
- 2023 Net Revenue Estimate: $2.6B
- 2025 Net Revenue Estimate: $14.5B
- 2023 Monthly Transacting Users Estimate: 8.5M
- 2025 Monthly Transacting Users Estimate: 32M
- 2023 Assets on Platform Estimate: $130B
- 2025 Assets on Platform Estimate: $500B
This means that Juan’s analysis concludes “that Coinbase’s stock would reach $1,000 if the company hit $14.5 billion in net revenue, 32 million monthly transacting users, and $500 billion of assets on the platform.”
Those are a significant increase from “the current position, but a strong capital inflow during a bull market is the perfect tailwind to help a company like Coinbase achieve stunning potential growth like this.”
Pompliano added that he “had financial exposure to Coinbase through the Morgan Creek Digital Assets fund for a number of years.”
The thesis ~ 5 years ago in “the private market was that Coinbase would serve as the best US-based, regulated exchange. They had great brand awareness, the team continued to innovate on the product in an impressive way, and the institutional offerings were starting to serve as the default for large capital allocators as they came into the market.”
Each of these components of the thesis “still remains true today.”
Additionally, Coinbase appears to “have transitioned a big part of their business into a crypto-native format.”
According to Qiao Wang, “the most impressive thing about Coinbase is they transformed themselves from a CEX to a crypto-native organization: wallet, L2, onchain identity, payment, and more.”