Are we allowed to talk about Bitcoin?

If Coinbase prices @ a $100 billion market cap, by way of comparison to the valuations of the established stock exchanges. ... it implies that its revenue is going to be 50 percent more than the COMBINED 2020 revenues of the Nasdaq and ICE, which is the parent company of the New York Stock Exchange. When this bubble makes the dot-com bubble look like a small pullback, people will look back on these things and wonder what the hell was going on.

In speculative-mania-world maybe this makes sense to someone. But when the Fed's everything bubble pops, a fair valuation is more on the order of $15 to $20 billion. There may be a trade -- hot money -- in Coinbase, but anyone buying it as an investment runs the risk of it losing most of its value when sanity comes back to the world.

That isn't a knock on its business or crypto. It's purely valuation. Even the rationale that bitcoin is going to take over the world and that the total market cap of crypto is going to skyrocket in short order because bitcoin is going to a million dollars makes no sense because if there is that much opportunity there, Coinbase is going to find itself with some serious competition (which also squeezes fee margins).

 

By the "success of crypto". ... if you mean the prices of various cryptocoins going up, up, up. ... that is what is driving the current interest in cyrptos, which is what is putting people on Coinbase's exchange.

If the prices of those cryptocoins start going down (I know, an impossibility), though and you own them, the value of what you have is going to decline.

In that environment, Coinbase won't keep growing the way it is, as new customers with dollar signs in their eyes won't keep coming in looking to strike it rich quick. But the business itself should offer a stability that the crytocurrencies won't if their prices are plummeting, because even when prices are going down, there is still trading that generates the commissions that are the source of revenue for Coinbase.

That doesn't mean that the price of Coinbase's stock won't decline, too. The main reason it is likely to behave like the cryptocoins themselves is that the company is being valued at a ridiculously way-overvalued-level today, which is predicated on more and more customers coming in and growing income unrealistically.

But let's say that the speculatively manic behavior was limited to the cryptocurrencies themselves, and Coinbase was being valued fairly. ... Coinbase would be a fine way to partake in some of the interest in bitcoin, without the immense amount of downside risk.

 

Did any of you buy shares today?