Coinbase can be used as a TradFi ‘index play on crypto’ – analyst
Correction: This article was edited on December 22nd to reflect that it was Will Clemente who suggested that Coinbase shares serve as an “index play” for traditional financial institutions, not Blockware's Mitchell Askew.
Coinbase shares can serve as an “index play” for traditional financial firms looking for a way to gain broader exposure to the cryptocurrency sector, said Will Clement, co-founder of Reflexivity Research.
“I think TradFi is probably looking at COIN [Coinbase] as kind of an index play on crypto because they have so many different positions right now, Clement said in a Dec. 21 space on X (formerly Twitter) hosted by Bitcoin (BTC) bull Anthony Pompliano.
“Someone can come into the space and say buy some Bitcoin, I don't really know which of these other assets to choose; Coinbase feels like a very safe index-style play,” he added.
https://t.co/3lmo5KzWVs
— Pomp (@Apompliano) December 21, 2023
Meanwhile, Matt Hougan, chief investment officer of cryptocurrency asset manager Bitwise, who was also in the X position, shared optimism about the future of the exchange.
“I think Coinbase is doing better than any other financial services company in America.”
Bitwise recently predicted that Coinbase's revenue would double by 2024, but Hugan thinks it could be even higher: “I think if their revenue is doubling, it's going to be very low.” So we have a lot to blame for this.
Bitwise operates the Bitwise Crypto Industry Innovators Exchange-Traded Fund (ETF), which holds shares of Coinbase.
“Wall Street views Coinbase as a pure exchange,” Clement added, but noted that it has other revenue streams, such as staking, being a Bitcoin ETF custodian, and being part of a circle.
Coinbase launched an Ethereum layer-2 called “Base” in August.
Related: Bitwise launches crypto ETF media campaign with ‘world's most interesting man'
However, Coinbase is still fighting a hard-fought lawsuit with the United States Securities and Exchange Commission, and several US senators are passing bills to restrict cryptocurrency activity in the US, which could affect Coinbase.
Since its launch, the base has been home to a few hacks and withdrawal scams, including the $6.5 million Magnet Finance scam and the $865,000 exploit on RockSwap.
Meanwhile, Cathy Wood's ARK Investments unloaded 237,000 Coinbase shares worth $331 million across three separate funds on Dec. 5.
According to data from ARK CEO Kathy Wood's official website, the company's ARK Innovation ETF has sold more than 900,000 shares of Coinbase since December.
Update Dec 22 at 5:44 am UTC: Updated article with comments from Will Clemente after comments from Mitchell Askew.
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