Animoca Brands, a venture capital firm and Web3 game developer, has refuted recent claims that it has scaled back its metaverse fund target by $200 million, or 20%, amid volatility in the crypto market and instability in the banking sector. The firm also downplayed suggestions that its valuation has plummeted from $6 billion as of July 2022 to roughly $2 billion in March 2023.
The claims were reported by Reuters on March 24, citing anonymous “people familiar with the matter,” who alleged that Animoca initially halved its $2 billion metaverse fund target in January and recently cut it another 20% to $800 million. The fund was announced in November 2022 to allocate capital to mid-to-late-stage startups with a metaverse focus, and Animoca co-founder and chairman Yat Siu outlined at the time that the fund target was between $1 billion and $2 billion, depending on how much capital was raised.
While Animoca acknowledged that the banking collapses in the United States have had an impact on available venture capital, the firm stressed that the final amount raised for the fund has yet to be determined. “When the raise is concluded, we will inform the market with the appropriate details, including the final size of this fund,” the firm stated.
Regarding the company’s valuation, Animoca asserted that the figures reported by Reuters and “two other” unnamed sources were inaccurate. The firm argues that its total market cap is not fully represented by the data from PrimaryMarkets, where its shares have traded since being delisted from the Australian Stock Exchange in March 2020.
Animoca terminated its arrangement with PrimaryMarkets in the second half of 2020, but the platform continued to trade its shares. The firm stated that “trading volume is far too low to provide the price accuracy you would find on an actual primary market.”
While the claims made in the Reuters report remain unverified, they highlight the impact of recent events on the crypto market and fundraising efforts. Animoca’s stance suggests that the firm is still confident in its ability to raise capital for its metaverse fund and that its valuation is higher than what has been reported. However, it remains to be seen how successful the fundraising efforts will be and whether Animoca will meet its original target for the fund.
Animoca Brands, a venture capital firm and web3 game developer, has denied recent reports that it has scaled back its metaverse fund target and experienced a significant drop in its valuation. The company refuted claims that it had reduced its metaverse fund target by $200 million, or 20%, to $800 million amid volatility in the crypto market and instability in the banking sector. The firm also downplayed suggestions that its valuation had plummeted from $6 billion as of July 2022 to roughly $2 billion in March 2023.
These claims were made in a March 24 Reuters report that cited anonymous “people familiar with the matter.” According to the report, Animoca initially halved its $2 billion metaverse fund target in January and recently cut it by another 20% to $800 million. However, Animoca co-founder and chairman Yat Siu had previously outlined that the fund target was between $1 billion and $2 billion, depending on how much capital was raised.
The metaverse fund, which was announced in November 2022, was designed to allocate capital to mid-to-late-stage startups with a metaverse focus. Animoca acknowledged that the banking collapses in the United States have had an impact on fundraising but stressed that the final amount raised for the fund has yet to be determined.
“While there’s no doubt that the FTX and banking crises have had a serious impact on available venture capital, fundraising for the Animoca Capital fund is in progress,” the firm stated. “When the raise is concluded, we will inform the market with the appropriate details, including the final size of this fund.”
In terms of its valuation, Animoca asserted that the figures reported by Reuters and other unnamed sources were inaccurate. The company, which trades as AB1, was initially listed on the Australian Stock Exchange (ASX) in its early days. However, AB1 was delisted back in March 2020 due to the ASX’s assertions that Animoca had breached its listing rules by being involved in crypto-related activities, among other things.
Since then, its shares have traded on unlisted stock-focused exchanges such as the Sydney-based PrimaryMarkets. The data from this platform was used to calculate a total market cap of AB1 at around roughly $2 billion. However, Animoca argues that these figures don’t fully represent the company’s total valuation.
“The claim […] that Animoca Brands ‘now trades its shares on PrimaryMarkets’ is not technically correct. We terminated our arrangement with PrimaryMarkets in the second half of 2020, but PrimaryMarkets chose to continue to trade Animoca Brands shares on its platform,” the firm stated. “We do not consider the thin trading activity on PrimaryMarkets to accurately reflect the company’s value. Trading volume is far too low to provide the price accuracy you would find on an actual primary market.”
Despite the challenges faced by the company, Animoca remains committed to its mission of developing web3 games and supporting startups focused on the metaverse. The firm has been at the forefront of the booming metaverse industry and is well-positioned to capitalize on its growth. As the industry continues to evolve and mature, it will be interesting to see how Animoca Brands navigates the challenges and opportunities that lie ahead.
Just looking at Binance Coin’s (BNB) reported market capitalization, one might conclude that the token is the dominant asset when compared to other exchange tokens.
Although there is no direct relationship between Binance’s exchange volume (or revenue) and token economics, traders seem to use it as a proxy. The controversial burn mechanism has been losing impact since April 2019, when the exchange changed the BNB whitepaper.
Initially, the whitepaper proposed a plan where BNB tokens equivalent to 20% of the exchange’s profit would be bought under a “repurchasing plan”, but the new version scrapped that plan.
Exchange tokens market cap and volume. Source: Messari Screener and CoinGecko
However, excluding the 60 million BNB that have never been in circulation drastically changes the outcome because these excess tokens are meant to be burned over time.
The remaining exchange tokens are inflationary, meaning the issuing rate is very steep. For example, Uniswap (UNI) has 611 million tokens in circulation, but that number is expected to reach 1.14 billion in 10 years.
BNB price (above) and Binance exchange daily volume (below). Source: TradingView and Nomics
How BNB differs from the other exchange tokens
BNB has an actual use case apart from trading fee rebates, and it is the primary asset pair on the Binance Smart chain. BNB captures a portion of the $17 billion total value locked in the BSC smart contracts, and it has decent market share and representation on decentralized exchanges. As a result, the network creates perpetual demand for BNB.
Based on these simple figures, should analysts discount BNB’s value by 50% compared to other exchange tokens? As mentioned earlier, the market appears to be pricing BNB based on Binance exchange’s volume, and thus it makes sense to use that as a valuation proxy.
Uniswap has been averaging $1.63 billion daily volume, although it offers exclusively spot markets. Hence, the figure is comparable with Binance’s $24.3 billion average, not factoring derivatives markets.
Using Uniswap’s 93.3% lower volume, the gross estimate accrues a $10.3 billion market capitalization based on 50% of BNB’s reported $76.7 billion. Thus, the prediction comes out 36% below UNI’s actual data.
PancakeSwap, the leading Binance Smart Chain’s DEX, has been handling a $750 million in daily volume. Using the same 50% of BNB’s market capitalization methodology, CAKE’s estimated valuation should be $4.73 billion, which is surprisingly in line with the current figure.
FTX and SUSHI are trading at a discount
Moving to a centralized exchange, FTX has amassed $1.7 billion in daily volume, including derivatives markets. Consequently, the indicator can be compared to Binance’s $54 billion average. Despite its 96.8% lower volume, FTX’s gross estimate valuation is $4.83 billion — 11% below the actual number.
Using Huobi’s adjusted $5.4 billion volume and Binance’s entire $54 billion daily average volume, including its derivatives products, results in a $15.34 billion estimated valuation. When considering Huobi Token’s unprecedented inflationary model, applying a heavy discount for the reported market capitalization makes sense.
Lastly, Sushiswap aggregates a daily $305 million transaction volume. Considering Binance’s $24.3 billion spot-only data, the same estimate yields a $1.92 billion valuation roughly 33% above the actual figure.
It is worth noting that this estimate does not imply an investment recommendation. This unrefined and primitive methodology simply aims to show that traders are effectively using exchange volume as a proxy for native token valuation.
While this may have worked in the past, the current regulatory, KYC, and removal of leverage trading options at centralized exchanges could impact the efficacy of this analysis method in the future.
The views and opinions expressed here are solely those of theauthorand do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
In the last episode of “Altcoin Evolution”, we discussed hurdles that can prevent more casual crypto investors from acquiring some of the more obscure altcoins. Obviously, accessibility to investment is paramount to getting in the hands of consumers, and for projects to continue their own ‘evolution’. Despite continued market-wide shifts to make crypto more easily accessible, the road is still long and tumultuous.
Another “crypto-winter” is never out of the question, and how broader society at large adapts to digital currencies is still yet to be determined. Still, the potential hazards are flanked by the vast amount of potential upside with the developing tech and consistent emerging projects in the space.
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The Altcoin Evolution: You’ve Got Questions, We’ve Got… More Questions?
Beyond last week’s coverage around accessibility, another variable arises in crypto from attaching tangible function to different coins. The questions are practically endless: What is the purpose of the project and token? How does it integrate into our current financial industry (or into other industries such as art and culture, or information systems)? Does the project have its own form of blockchain, or is it operating on one of the larger, more established arenas? Unique value propositions are paramount in any project, and these could include any number of things that can be derived from any of these questions.
Some coins are designed with specific usages in mind, often on existing blockchains, and are typically referred to as “utility tokens”. Let’s elaborate further: tokens generally break down into one of two buckets – utility tokens or security tokens. The differentiator between the two has by and large been established as the SEC’s Howey Test, which historically has been used to define a securities contract. Utility tokens are predominantly providing consumers with a product or service, rather than being seen as a traditional investment vehicle. Security tokens’ value proposition is typically pretty straight-forward, however things are not typically as clear with utility tokens in today’s landscape.
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A majority of these tokens, especially around the NFT space (which we’ve regularly turned to throughout this series), are currently working on the Ethereum blockchain. This applies to ECOMI (and it’s OMI token), as well as some of the original projects on Flow that existed before the FLOW token (such as CryptoKitties), both of which are referenced in earlier installments of this series. These were designed with the concept of providing access to goods/services, such as NFT collectibles, creating an economy based around exchange of the coin. In essence, a marketplace functioning sans fiat currency.
ECOMI is built on the back on the backbone of the Ethereum network. | Source: OMI-USDT on TradingView.com
Related Reading | Bitcoin Poised To Explode Above $50K?, Why Fundamentals Shout More Profits
Is It, Or Isn’t It?
Of course, the lines between utility are often far from being black and white. Some NFT critics suggest that for the likes of NBA Top Shot, Topps MLB, or ECOMI, IP integration won’t be enough to carry the load. Critics of other NFT projects, like CryptoPunks or Bored Ape Yacht Club, often argue that the communities generated from this projects won’t have staying power (despite prices for CryptoPunks being as high as ever, approaching year five of the project).
Furthermore, while emerging and established NFT projects make for prime examples in this conversation, these criticisms don’t start or finish with NFTs. For many years now, the biggest Cardano (ADA) critics have furrowed their brow that the utility and use case around the coin was not clear and well-defined. Despite this, Cardano is the third largest cryptocurrency by market cap. Talk about an altcoin evolution.
Our objective here isn’t to make an argument for or against any of these projects, but only to emphasize that dialogue in the crypto-community around utility is ever-present. After all, the value of IP is often arbitrarily assigned even in contexts outside of crypto.
Don’t Stop Now… It’s More Than IP
Furthermore, utility of course doesn’t stop or start with just IP either. Writer and founder Zoe Scamanoutlined her recent perspectiveof “five key components of a crypto-native, fandom-centric brand”. The core components include Worldbuilding & Narrative, Cultivating Community, Status & Access, Open IP, and Shared Equity. These traits undoubtedly outline “value”, but the measuring stick is as unclear as ever. The bearish perspective would likely suggest that even these core components aren’t enough for true longevity, while the bullish perspective would state that these qualities can build NFT projects that will last a lifetime. Like many things in life, the reality likely lands somewhere in the middle of it all.
In all, the concept and evolution of utility coins is still relatively new and fresh – even when compared to the phenomenon of digital currency as a whole. The wild west is an apt metaphor for the developing landscape of purpose driven coins. However, as society’s reliance on digital innovation continues to gain ground, so does the opportunity for crypto projects to find more platforms to exercise use case.
A prime example just this week was the decision-making at OnlyFans,as reported on at our sister networkat Bitcoinist. As the site reportedly tightens down on adult content, the need for a decentralized, creator-first platform becomes abundantly clear. Many have speculated that some sort of crypto solution, such as the Bitcoin Lightning Network, could fill the void.
As DeFi and other use-case driven crypto projects inevitably move forward, there will be even more utility opportunities and functionality needs. The difficult part is valuing them. For emerging tokens and projects, demonstrating the problem and how the project addresses the problem, is vital.
In next week’s “Altcoin Evolution,” we’ll take a look at the final set of challenges – ‘selling’ a project or token to the general public and what it takes for crypto projects to stand out.
Related Reading | These Ethereum Indicators Show Whales Continue To Accumulate
Charts from TradingView.com, Image courtesy Jerry Sena
After a 13% rise in two days, Bitcoin’s (BTC) market capitalization surpassed $800 billion to reach its highest value in 79 days. During the same timeframe, Ether (ETH) accumulated a 45% gain in two weeks, placing the network’s market capitalization at $340 billion.
Positive expectations for the London hard fork and its potential deflationary effect undoubtedly played a role, but some investors continue to question how Ether’s valuation stacks against Bitcoin. Some, including Pantera Capital CEO Dan Morehead, expect Ether to outpace Bitcoin as the largest cryptocurrency.
Market participants may have also been excited after Minneapolis Federal Reserve President Neel Kashkari suggested that the Fed may stick with the asset-purchase program a bit longer. The reason cited was the Delta variant’s spread and its potential harm to the labor market.
Kashkari said:
“Delta could discourage people from returning to jobs that require in-person interaction and keep kids out of schools.”
Extending the stimulus for longer raises the inflationary risk, which increases the attractiveness of scarce assets like real estate, commodities, stocks, and cryptocurrencies. However, the impact of these macroeconomic changes should equally impact Bitcoin and Ether.
Active addresses give Bitcoin a clear lead
Comparing some of Ethereum’s metrics could shed some light on whether Ether’s 58% discount is justified. The first step should be to measure the number of active addresses, excluding low amounts.
Addresses with $1,000 or higher balances. Source: CoinMetrics
As shown above, Bitcoin has 6 million addresses worth $1,000 or higher, and 3.67 million have been created since 2020. Meanwhile, Ether has less than half at 2.7 million addresses with $1,000. The altcoin’s growth has also been slower, with 2.4 million of those created since 2020.
This metric is 55% lower for Ether, and this corroborates the market capitalization gap. However, this analysis does not include how much large clients have invested. Although there is no good way to estimate this number, measuring cryptocurrency exchange-traded products could be a good proxy.
Ether lags on exchange-traded products
Publicly traded crypto products. Source: Bloomberg and Investing.com
After aggregating data from multiple exchange-traded instruments, the result is telling. Bitcoin dominates with $32.3 billion in assets under management, while Ether totals $11.7 billion. Grayscale GBTC plays a vital role in this discrepancy because its product was launched in September 2013.
Meanwhile, Ether’s first exchange-traded product came in October 2017, when the XBT Provider Ether Tracker was launched. This difference partially explains why Ether’s total is 64% lower than Bitcoin’s.
Futures open interest justifies the price gap
Lastly, one should compare the futures markets data. Open interest is the best metric of professional investors’ actual positions because it measures market participants’ total number of contracts.
An investor could have bought $50 million worth of futures and sold the entire position a couple of days later. This $100 million in traded volume does not currently represent any market exposure; therefore, it should be disregarded.
Bitcoin futures aggregate open interest. Source: Bybt
Bitcoin futures open interest currently amounts to $14.2 billion, down from a $27.7 billion peak on April 13. Binance exchange leads with $3.4 billion, followed by FTX with another $2.3 billion.
Ether futures aggregate open interest. Source: Bybt
On the other hand, the open interest on Ether futures peaked about a month later at $10.8 billion, and the indicator currently stands at $7.6 billion. Therefore, it is 46% lower than Bitcoin’s, which further explains the valuation discount.
Related:Ethereum market cap hits $337 billion, surpassing Nestle, P&G, and Roche
Other metrics like on-chain data and miner revenues show a more balanced situation, but both cryptocurrencies have different use cases. For example, 54% of the Bitcoin supply has remained untouched for longer than one year.
The truth is that any indicator has a downside, and there is no definitive valuation metric to determine whether a cryptocurrency is above or below its fair value. However, the three metrics analyzed suggest that Ether’s upside, when priced in Bitcoin, does not signal a “flippening” anytime soon.
The views and opinions expressed here are solely those of theauthorand do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Bitcoin (BTC) investors are known for being bullish, and even during 50% corrections like the current one, most analysts remain optimistic. One reason for investors’ endless optimism and belief in infinite upside could be BTC’s decreasing issuance and the 21 million coins fixed supply limit.
However, not even the most accurate models, including the stock-to-flow (S2F) from analyst Plan B, can predict bear markets, crashes, or FOMO-induced (fear of missing out) pumps. Traders usually misinterpret these concepts as value and price expectations can be easily mistaken.
Bitcoin does not exist in a vacuum, even if BTC maximalists think so. Therefore, its price action heavily depends on how many dollars, euros, and yuans are in circulation and interest rates, real estate, equities, and commodities. Even global economic growth and inflationary expectations impact the risk appetite for people, companies, and mutual funds.
Bitcoin’s current price drivers
Regardless of what these valuation models predict, price is exclusively composed by the market participants at any given moment. Opposite to what one might expect, data from CryptoQuant shows only 2.5 million Bitcoin currently deposited on exchanges. Compare this to the 10.7 million that hasn’t been moved in the last 12 months according to ‘HODL wave’ data, and we can say that long-term holders have no say in the price.
As the difference between value (subjective) and price (historical and objective) becomes more evident, it is easier to understand why some investors expect $100,000 or higher targets for the end of 2021. However, to correctly interpret what odds are being placed for those prices, one needs to analyze the calls (buy) existing in the options markets.
Bitcoin aggregate call options for Dec. 31. Source: Bybt
Although the call (buy) options vastly dominate compared to the protective puts, this is common for almost every asset class on longer-term expiries. However, a call option with a $50,000 strike should be more representative than a $200,000 one because their prices will be noticeably different.
At the time of writing, a right to acquire (call option) Bitcoin for $50,000 on Dec. 31 is valued at $4,350. Meanwhile, the same instrument using a $200,000 strike price costs $415, which is roughly ten times lower.
Cointelegraph previously explained how $100,000 to $300,000 strikes should not be taken as precise analysis-backed price estimates. Investors typically sell higher-strike calls while simultaneously buying the more costly call option with a lower strike.
In short, assuming that investors are exclusively buying the ultra-bullish call options is naive and usually wrong. However, even the option strategies involving selling those options are generally neutral-to-bullish.
$100,000 is still in play according to options markets
According to the Black & Scholes model, the current $1,185 price for the $100,000 call option has a 13% mathematical probability. It is worth noting that this methodology considers the price exclusively on Dec. 31 at 8:00 am ET and does not count the $99,999 price as a success.
Despite this, there is strong evidence that professional traders are still valuing the year-end $100,000 options. It might seem far-fetched right now, but Bitcoin’s volatility opens room for surprise, especially considering that there’s still half a year ahead.
The views and opinions expressed here are solely those of theauthorand do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Ether (ETH) price has rallied more than 200% in 2021, resulting in a massive $337 billion market capitalization. This impressive figure pushed the value of the Ethereum network ahead of the total market cap of major companies like Procter & Gamble’s ($326 billion) and PayPal’s $308 billion.
The market cap figure is achieved by multiplying the last trade price by the total outstanding number of coins, regardless of whether they’ve been moved. Therefore, it seldomly reflects the average price where most investors transacted.
For investors from traditional finance, ‘value’ is assessed by comparing multiples and valuations. These are often calculated in the form of earnings, sales, and market share, and attempting to apply these same ‘value’ metrics to cryptocurrencies with multiple use cases creates uncertainty and discomfort.
Ether is a multi-faceted asset that is difficult to evaluate
There is not a bullet-proof metric available to assess how Ether’s value stacks against its potential. The cryptocurrency might simultaneously act as a digital store of value while also functioning as the token required to access the Ethereum network.
Ether market cap, in USD billion. Source: TradingView
Therefore, one must consider the coins deposited on exchanges or the percentage effectively changing hands when comparing different asset classes. The existence of regulated derivatives markets allow institutional investors to bet against the asset’s price, and it is another factor that should be accounted for.
Largest global assets’ ranking by market capitalization. Source: Infinite Market Cap
While the merits of comparing the market cap of different asset classes side-by-side is debatable, the metric essentially works the same way for commodities, stocks, and mutual funds.
According to data from Infinite Market Cap, Ether recently surpassed the market cap of Nestle, Procter & Gamble, PayPal, and Roche.
The American multinational consumer goods company P&G was founded in 1837 and holds a diversified brand portfolio, including personal health, consumer care, and hygiene. With 100,000 employees worldwide, the conglomerate posted a $13 billion net income in 2020.
On the other hand, Ethereum has 2,320 average monthly developers, according to the Electric Capital’ Developer Report’. Although it is not a secular company, its decentralized applications (dApps) handle over 100,000 daily active addresses. Even more impressive is the $12 billion daily transfer and transactions on the Ethereum network. These numbers alone are outstanding even for an S&P 500 company.
Stocks have their own risks, which can’t be ignored
Comparing a 183-year company that is heavily dependent on production and distribution to a technology-based protocol is unlikely to uncover many similarities. However, equity investors enjoy the fruits of dividends, and while some will argue that Ether could be staked for a return, there are more significant risks involved.
Investors staking in the ETH 2.0 contract have the options of becoming a full validator or joining a pool but their coins could be lost due to malicious activity or by failing to validate network transactions. Similar risks emerge when lending Ether via centralized services and decentralized protocols.
On the other hand, listed companies can create new shares to benefit from excessive valuations or increase their cash position.
Tax changes, operational liabilities, and regulatory changes are other risks that stockholders sometimes face. For example, Roche was recently challenged for $4.5 billion from the government for deceiving the CDC, according to a lawsuit unsealed in September 2019.
Decentralized protocols are virtually free of these perils, and perhaps this justifies their sky-high valuations.
Considering the risks described above, investors might conclude that holding Ether is less risky than buying stocks. At least it is possible to self-custody, making the asset less dependent on third parties and unauthorized transactions.
The views and opinions expressed here are solely those of theauthorand do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Major U.S. exchange Coinbase’s COIN stock has received a reference price at $250 from Nasdaq, ahead of the much-anticipated direct listing on the stock exchange just hours from now.
The price is far below the current FTX pre-trading price of $600, albeit on thin 24-hour volume of under $4 million.
The exchange is going public via a direct listing instead of an IPO, meaning the reference price is not a direct indicator of the company’s market cap. It simply implies a valuation of $65 billion, which is below other estimates ranging between $68 billion and $120 billion.
The Nasdaq announcement stated that the reference price, which reflects past transactions but was established by consultation with Coinbase’s financial advisors, was created due to the fact “COIN has not had recent sustained trading in a private placement market.”
The reference price does not reflect the opening price, the announcement made clear:
“Please note that the reference price is NOT an offering price and nobody has purchased or sold shares at that price. The opening public price will be determined based on buy and sell orders in the opening auction on Nasdaq.”
This is the first significant direct listing on the Nasdaq. According to CNBC, across “the five significant direct listings that have taken place on the New York Stock Exchange — Spotify, Slack, Palantir, Asana, and Roblox — the opening price was on average about 37% above the reference price.” Following this trend, it would put Coinbase’s opening price above $340, with a valuation of around $90 billion.
The trading price could surge even higher with the Coinbase pre-listing contract CBSE currently trading around $600 on the FTX exchange, representing a 140% premium above the reference price. Another indicator suggesting a strong first day was the Q1 2021 financial statement suggesting revenue spiked to $1.8 billion bringing in net income up to $800 million, which is up from the $32 million recorded during the same period last year.
In the lead-up to the Nasdaq listing, Coinbase surprised all 1,700 full-time employees by giving them 100 shares each, worth $25,000 at the current reference price. The March 25 “thank you” gift is a no-strings-attached grant, meaning they could sell them immediately after the listing goes public tomorrow.
These shares are in addition to the 105,510 share options handed out to employees of Coinbase’s Irish arm in recent years.
Coinbase has announced impressive first quarter results one week before the exchange’s direct listing on the Nasdaq, estimating that trading volume is up 276% and quarterly revenue has hit $1.8 billion.
The bountiful revenue, revealed in the company’s Q1 earnings call, dwarf its $190 million revenue from the same time last year with the company attributing a portion of this explosive growth to Bitcoin’s bull market.
The U.S exchange estimated net income between $730 million and $800 million and an EBIDTA of approximately $1.1 billion.
The bull market has also seen monthly active users grow to more than six million users, up from 1.3 million in the first quarter, with crypto assets on the platform rising 1200% year-on-year from $17 billion to $223 billion.
The U.S.-based exchange’s CEO Alesia Haas said:
“We have seen all time high crypto prices drive elevated levels of user activity and trading volume on our platform.”
Boasting 56 million verified users, Haas suggested that active monthly users could rise to seven million at most this year, although he warned this could drop to four million if a bear market hits this year.
The company is spending big to acquire new customers. Following next week’s listing, Coinbase intends to increase its sales and marketing expenditure to between 12% and 15% of this year’s net revenue in an effort to drive “meaningful growth in 2021.”
“Looking to full year 2021, in order to scale our operations and to continue to drive product innovation, we expect our technology and development expenses and our general and administrative expenses to be between $1.3 billion to $1.6 billion, excluding stock-based compensation, in 2021.”
The report results are preliminary and unaudited, however, the exchange wanted to release a detailed report prior to the Nasdaq listing set for April 14. The company will register nearly 115 million shares of Class A common stock, under the ticker symbol COIN. As a direct listing, the exchange won’t be selling new stock and can only register existing stock, allowing existing stakeholders to sell their shares to new investors.
Coinbase has received multiple valuations ranging from $68 billion based on private market transactions to more than $120 billion.
Investment research firm New Constructs CEO David Trainer had his doubts about the lofty expectations. “Coinbase’s expected valuation of roughly $100 billion is far too high,” he said in a note to clients Monday.
“It’s hard to make a straight-faced argument that the firm can justify the lofty expectations baked into its valuation given increasing competition in a mature cryptocurrency trading market and the lack of sustainability in its current market share and margins.”
FTX founder Sam Bankman-Fried took to Twitter to congratulate Coinbase on its impressive quarterly figures and upcoming IPO listing, and compared it to his own, much newer exchange’s figures.
5) FWIW, FTX likely had:
a) ~5-15% of the revenue
b) ~10-25% of the earnings
c) ~2x the volume
d) way fewer users
e) higher in-quarter growth
f) a bit higher year-on-year growth
(NOT FINANCIAL ADVICE, NOT AUDITED YET, JUST ESTIMATES)
Reddit doubles its valuation to $6 Billion after raising another $250 million in a Series E fundraising round, as announced by the company on Monday night. The news comes just weeks after the social media platform made the headlines for facilitating the discussions of day trading hedge fund disruptors in its subreddit r/WallStreetBets.
Reddit Inc. doubled its valuation to $6 billion in a new round of funding that comes as the social-media company has been in the headlines for its role in facilitating the Wall Street trading frenzy of GameStop and AMC coordinated buying attacks.
Reddit on Monday said it raised $250 million in a late-stage funding round led by venture-capital firm Vy Capital.
The social media giant was previously valued at $3 billion after its last funding round in February 2019, according to PitchBook, a provider of private-market data. Reddit’s previous investors include venture-capital firm Andreessen Horowitz and internet conglomerate Tencent Holdings Ltd.
As reported by the Wall Street Journal, Reddit Chief Executive Steve Huffman said:
“It’s a good market to fundraise […] Valuations are very high right now. It never hurts to raise money when there’s an opportunity to do so and Reddit had a strong year.”
Huffman highlighted that advertising revenue for the company had shot up 90% in the December-ended quarter from the previous year.
Reddit And Coordinated Buying Attacks
Coordinated buying attacks are multiplying and spreading throughout the cryptocurrency sector inspired by members of a Reddit Forum called WallStreetBets.
Over the last few weeks, traders have been emboldened and inspired by a group of amateur day traders based on a Reddit forum called WallStreetBets (WSB), who recently launched a coordinated buying attack on the video game retailer Gamestop, triggering a short squeeze and inflicting heavy losses for hedge funds like Melvin Capital.
While Reddit is just the platform being leveraged to facilitate day trader discussions, along with platforms like Telegram, the recent surge of attention appears to have aided Reddit in its late-stage funding round which has now seen the platform reach a valuation of $6 Billion.
