Times are Changing, CEx goes Public

Stocks use to be a great way for companies to raise funds for growth in a competitive market. Today they often feel like an exit strategy for founders, earlier investors or venture capital.

Coinbase will likely be a great stock based on current performance and earnings. It is a good company in the crypto market but one must realize it’s competition in both CEx (Centralized Exchange) and DEx (Decentralized Exchange). Binance and Uniswap bring some heavy competition among others.

During the crypto bull run, Coinbase's stock will likely do well as people FOMO (Fear Of Missing Out). Coinbase is just the starting ground for many getting into crypto as people move on to things like DeFi which often requires self custody. Eventually Coinbase will have to go the direction of Kraken and get a bank charter or just be another trading house like a Schwab. These industries will eventually converge.

I see wallet providers like Coinbase in a battle for who can provide yield or benefits in exchange for deposits. Many of these crypto wallets make money sitting in a bank look like a joke. Banks realize this too as they limit funds which are able to be withdrawn from dollars into crypto exchanges. They've also been known to close accounts which actively interact with crypto due to potential fears from illicit activities which only comes from a lack of understanding and fear. While it's probably true that many banks under estimate their AML (Anti-Money Laundering) liabilities, crypto is easier to track than dollars when KYC'd (Know Your Client). People in crypto know it's really about maintaining deposits and this fear is real. Unlike stocks, bonds or low interest accounts, crypto enthusiasts are often use to higher yields and banks are losing this battle; especially as people gravitate towards Bitcoin as a safe haven reserve asset. Banks will be forced into being custodians, if they wish to participate and keep clients.

The IPO (Initial Public Offering) of Coinbase will bring more people to crypto as people begin to wonder how and why Coinbase is doing so well. I have to imagine that an older generation sitting with a fixed income during a time of inflation will begin to wonder what they are missing out on. Many younger generations are leaving the stock market for crypto. Personally I believe in holding both but will say that the crypto gains have far exceeded stocks as a whole for the moment. I'm fully aware of the potential for pull backs and dark crypto winters which was seen after 2017's bull run.

In my opinion, platforms like Compound and Aave may be the banks of tomorrow or at least the backend of future banks. But many company stocks fail over time and many cryptos will also lose value over time as a platform becomes obsolete. Times are changing and only time will tell.

Just my two cents which should not be taken as financial advice. I’m just relating my experience.

Disclosure Statement: This is just my observation and findings. This content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained here constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments whatsoever by the author, presenter, or other associated parties for the content being provided. Crypto is a speculative and high risk investment with potential for complete loss. Regulation of crypto is currently undetermined and often changing. Past performance is no guarantee of future results.