Niu Niu Tong Sheng
Is Coinbase likely to become the next S&P Crypto stock king?
A significant milestone in the Crypto world has arrived—America's largest cryptocurrency Exchange has been officially included in the S&P 500 Index! $Coinbase(COIN.US)$
Some say this is Wall Street's 'official certification' of crypto Assets. What implications does this have for the prospects of crypto and related assets? Is a new wave of investment enthusiasm about to explode? In this episode, Futubull will tell you.
Crypto friends should feel quite encouraged lately, $S&P 500 Index(.SPX.US)$ with a new face joining in: the cryptocurrency Exchange Coinbase replaces the established financial company Discover Financial as a component stock of the S&P 500 Index. It is the first pure cryptocurrency Business to join the index. Once the news broke, Coinbase surged over 23%.
The market is so excited because the component stocks in the S&P 500 Index account for about 80% of the total Market Cap of the U.S. stock market, making it one of the benchmarks for investors to gauge market trends, and it is even hailed as the 'gold standard' of the U.S. stock market. Therefore, some analysis suggests that Coinbase's inclusion in the index confirms that crypto is becoming an indispensable part of the market.
It has not been easy for Coinbase to successfully be selected for the index. Let's first briefly understand this company:
Coinbase was founded in 2012 and became the first publicly listed large cryptocurrency company in the U.S. by direct listing in 2021.
Its core Business is Crypto Trade, serving retail and Institutions, with its revenue mainly coming from trading fees. The latest performance report shows that out of over 2 billion dollars in revenue, more than 1.2 billion dollars comes from trading.
Most of the time, the Crypto market trends are closely related to Coinbase's stock price performance. For example, everyone should remember the end of 2024. $比特币 (BTC.CC)$ With rising prices, trading activity significantly increased, leading to better performance in company revenue, which was Bullish for Coinbase's stock price. However, during the crypto winter in 2022, overall trading volume drastically decreased, causing a drop in company revenue, and the stock price fell as well.
However, Coinbase does not solely rely on trading fees for survival; the company is actively expanding its non-trading Business, stating its goal to build a diversified ecosystem, including asset custody, subscription services, stablecoin payments, and Crypto staking reward programs.
In addition to market volatility affecting company performance, regulatory issues have always been a barrier faced by Coinbase.
The US Securities Exchange can be said to continuously target Coinbase. For example, it has been accused of operating without a license and suspicions of Coinbase overstating its users.
Additionally, Coinbase was earlier attacked by hackers, resulting in the leakage of data from over a million users, with estimated losses reaching up to 0.4 billion dollars, raising concerns about Coinbase's security and undermining user trust.
Although facing numerous issues, the most important thing is that someone has 'backing.'
As is well known, U.S. President Trump is now strongly supporting Cryptos, and Coinbase has also benefited from this. Since Trump announced his election victory last year, Coinbase has surged by over 80% at its peak.
With the current recognition from Wall Street, has Coinbase gone public?
Some analysts believe that Coinbase's visibility among investors will increase, marking a gradual enhancement of Cryptos' position in the mainstream financial system. The market also expects that Coinbase's stock price will rise because index-tracking Funds will include it in their portfolios. Currently, major firms have forecasted the highest Target Price to reach $400.
Is Coinbase's inclusion in the index a "small step for Wall Street, a giant leap for Cryptos"? With so much News available, is there still value in Coinbase now, and how can investors position themselves? Let's listen to expert analyses.
Wall Street's move to include Coinbase in the S&P 500 Index is undoubtedly an exciting piece of news for the entire cryptocurrency circle. A saying from Mainland China is "running towards each other." Mainstream investment Institutions on Wall Street are starting to believe that Cryptos can truly be regarded as an asset class. In addition, many cryptocurrency-related companies listed in the United States are also constantly trying to enter the index.
I believe that in the future, more funds, whether from listed or unlisted companies, will start considering integrating more Cryptos into their asset allocation.
If Coinbase successfully enters the index, $Strategy(MSTR.US)$ There is also a chance to enter the index.
This is just the beginning; I believe more competitors will join in the future, and the competition that Coinbase faces is likely to be quite significant.
It is expected that the lower limit for Bitcoin's price will be around 0.07 million dollars, with the upper limit around 0.13 million dollars. What I am more concerned about is that Bitcoin's price may be quite volatile this year.
First, the disruption of Technology, especially technologies related to artificial intelligence, similar to the third industrial revolution, could impact the economy in the United States and globally.
Secondly, the disruption of the supply chain caused by policy will also affect economic trends and market sentiment, thereby indirectly impacting the sentiment in the Cryptos market.
In fact, many companies have conducted research and found that including Cryptos in investment portfolios can enhance the efficiency frontier (the efficiency frontier refers to the highest expected ROI that can be achieved for a given total risk).
For example, if the investment allocation is 57% Stocks and 37% Bonds, adding the remaining 6% in Bitcoin would increase your ROI by 1% to 1.2% and reduce the maximum drawdown.
At the recent Bitcoin conference, what U.S. Vice President JD Vance mentioned should require some substantial progress, especially in establishing a legal framework that allows the general public easier access to Cryptos, while also protecting investor rights. If JD Vance can provide a positive answer, I believe the market will be very invigorated.
