The $ 100 billion Coinbase valuation is too high, according to the analyst

Coinbase’s current rumored valuation is around $ 100 billion. However, according to Wall Street veteran David Trainer – CEO of securities research firm New Constructs, the number is “too high”.

Prior to the upcoming live listing, Coinbase’s private trading indicated the implied market value for the exchange to $ 100 billion. Trainer says that given the growing competition in the market, both Coinbase’s current market share as well as Coinbase’s profit margin will look sustainable in the crypto market that is and continues to grow into the future.

However, he argues that Coinbase pricing is based on sentiment, rather than fundamental analysis.

“I think Wall Street doesn’t want people to have any form of exact price discovery other than the more deceptive theory that allows them to sell assets, especially during the bubble period at unreasonable prices. their basic rules.

A profitable year for Coinbase

According to a report published by New Constructs, Coinbase stands out from recent IPOs (initial public offering) because the company has actually made a profit in the past fiscal year.

Citing Bloomberg, the report notes 85% of companies that were publicly listed last year were unprofitable. However, Coinbase’s $ 322 million return as shown in the recent S-1 filing created a positive wave for corporate and stock investors.

But according to Trainer, optimism about the broader crypto industry – in which Coinbase plays a key role – has fueled the sentiment for the company’s shares that are largely unfounded.

Furthermore, Trainer suggests that this kind of bubble has happened before, in industries like aerospace and auto manufacturing.

“The early days of those inventions had a lot of fanfare and overvaluation of so many companies, but in the end, only a handful of them survived and the actual valuation dropped.”

And just like those markets, which were once in their infancy, the crypto exchange market is still immature.

The mature cryptocurrency market

According to Trainer, share prices must certainly match the costs of their competitors living in a mature market – something the current crypto exchange market doesn’t have.

In the New Constructs report, investors are advised not to buy Coinbase stock “anywhere close to the rumored level.”

Trainer may not be optimistic about Coinbase stock, but he did say there is a difference between stocks and company.

According to Trainer, there is no evidence that Coinbase’s current value will be there forever. “There is a difference between a good company and a good stock,” Trainer said, adding that nothing in the company’s current structure suggests they have some secret technology advantages. allowing the company to stay ahead of competitors.

Of course, those competitors (Kraken, Binance, Gemini and Bitstamp) are watching Coinbase’s listing with particular interest. Trainer said:

“They are considering filing S-1. Like every other private equity company in the world, they see a profit and they want a share”.

Bitcoin transaction behavior that you need to pay attention

The pandemic is considered a tipping point for Bitcoin, however, after hitting a high of $ 12,000 in August, Bitcoin’s price has caused retail traders to stall. Based on Bitcoin’s market cycle, we are in an accumulation phase and the price could move higher in the next few weeks, however, the reaction of institutions and retail traders has a big effect on it.

When you run rocket gifs, bullish tweets, and headlines like – Bitcoin will hit $ 400,000, you know it. You know you’re crossing the threshold of change, maybe headed for a different one! There is enough pressure on retail traders from uncertainty and volatility in the cryptocurrency market.

Bitcoin price is up 7.2% in a week and 10% in 30 days. With this leap forward, there are mixed reactions on Crypto Twitter.

Source: Twitter

“I think we filled those gaps in the low $ 11k zone before we got much higher ($ 13k territory). But I told myself that I would make an excuse to play the dragon just because the high PNL would terrify me, which is exactly what was happening. There are two wolves inside of me ”.

Keeping a little longer comes at its own risk. Bitcoin’s 60-day volatility is currently at 5.04%, a month ago at 10.9%.

Bitcoin’s 60-Day Volatility | Source: Woobull

Based on data from Bitcoin’s 60-day chart, it took less than 30 days for volatility to double or drop below half. Currently, the price is above the 200-day MA and the Mayer Multiple is at its lows. However, this can change overnight, if the inflow of money into exchanges increases through mining pools or whales. When the price crosses $ 10k, 83% of HODLer is expecting unrealized profits, at $ 11.4k there is 89% with unrealized profits.

In such a volatile environment, a conformist can go on, while an objection may decide to take profits before rejoining.

The reward / risk ratio is skewed in Bitcoin, however, trading in alts can bring more benefits. Every alt rally has a single altcoin leading, and that’s where most of the profits are recorded. During the historic price rally in 2017, it was XRP and this time the possible candidates were LINK and BCH. LINK is up 21.02% in a week and BCH is right behind with 13.45%.

Source: Coinmarketcap

If opening new positions on Bitcoin is too stressful, then two-digit profitable altcoins could be the next best bet. XRP increased from $ 0.25 to ATH of $ 3.84. This 1400% price increase could be reflected in the next rally. LINK, ADA and ETH continue to rise and based on DOT returns over 24 hours, XRP could become a competitor in the coming weeks.

Bitcoin whale activity shows that retail investors are flooding the market

Bitcoin and the entire crypto market have, thus far, seen a quiet day of trading. BTC is mostly hovering around the $ 11,000 zone, while altcoins all have similar periods of consolidation.

Bitcoin’s latest rally comes shortly after news of Square buying $ 50 million worth of BTC to keep on their balance sheet as a reserve asset.

This news seems to have sparked the momentum that the cryptocurrency has faded away, ultimately helping to take it to its recent high of $ 11,700.

A trend seen when looking at whale activity seems to suggest that retail investors are about to flood the market.

Bitcoin price is stabilizing

At the time of writing, Bitcoin is down only 0.5% at its current price of $ 11,429. This is where it has been trading for the past few days.

It’s important to note that both the bulls and the bears have largely come to a standstill in time after the cryptocurrency soared to a high of $ 11,700 earlier this week.

Because the bulls have gained control of the cryptocurrency’s mid-term trend, there is a strong possibility that the next uptrend is imminent in the near term, but it faces some stiff resistance at $ 11,600.

Retail investors are entering the market

A trend seen when looking at Bitcoin whale activity suggests that retail investors are quickly entering the market.

While consulting Glassnode’s data, Unfolded explains that the drop in Bitcoin whales signals that retail investors are pouring in.

“Historically, the onset of a decline in BTC whales has often indicated increased interest from retail investors and a start to run to the top of the market.”

This trend – if it continues – could mean a large amount of capital is on the sidelines waiting to enter Bitcoin and the synthetic cryptocurrency market.

Disclaimer: This is not investment advice. Investors should learn carefully before making a decision. We are not responsible for your investment decisions.