Plus: Coinbase’s current implied valuation
Validation of crypto by established financial services companies came in a big way this week, with PayPal and Visa looking at how the company direction could involve crypto. Similarly, Microstrategy’s Bitcoin for Corporations event drew more than 5,000 attendees, with one speaker estimating that by year’s end, institutions would hold $25 billion in bitcoin. And Coinbase keeps moving forward on its direct listing plans, choosing Nasdaq as its venue, and trading already on its secondary market, at prices indicating a valuation of $50 billion.
Meanwhile, the crypto markets themselves continue their upward march, with January metrics showing many numbers at or near all-time highs — despite the fact that it feels like this bull run has barely gotten started.
On Unchained, learn everything you need to know about your crypto taxes this year — and yes, we’re looking at you, yield farmers. And on Unconfirmed, find out why Asia dominates in crypto futures, how the West misperceives crypto in the East, and what the differences are in the crypto space between different Asian countries.
This Week’s Crypto News…
The Block reports that crypto exchange Coinbase, which will be going public via a direct listing later this year, has chosen Nasdaq as its venue. The selection is somewhat surprising given that the New York Stock Exchange, a Nasdaq rival, is an investor in Coinbase. However, the pick makes sense given that Nasdaq tends to be the home for technology stocks. On January 25, Nasdaq Private Market, which allows secondary trading for shares in private companies, launched trading for Coinbase stock. According to The Block, shares were matched at a price of $200, which implies a roughly $50 billion valuation for the largest crypto on-ramp in the US. That figure is lower, however, than the implied $70 billion valuation based on the pre-IPO futures contracts that have been trading for Coinbase on derivatives exchange FTX.
At the Bitcoin for Corporations event held by Microstrategy on Wednesday and Thursday, chief executive Michael Saylor said that more than 5,600 people had registered. And 1,400 companies had signed up for the conference session on legal considerations regarding buying Bitcoin. At the conference, Ross Stevens, CEO of Stone Ridge Asset Management and executive chairman of NYDIG, its Bitcoin subsidiary, estimated that there would be $25 billion in institutional Bitcoin assets by year’s end. Either way, watch this space for the impact this event has on bitcoin over the same timeframe.
In other corporate bitcoin news, Ruffer, the multibillion-dollar investment management firm in the UK that had invested in bitcoin last November, sold 40% of its holdings, netting $650 million.
Total adjusted on-chain volume, which is another measure for economic throughput, nearly doubled from December to January, hitting $529 billion. That’s 72% higher than the previous all-time high of $308 billion, in January 2018, the top of the last bubble. From December 2020, Bitcoin’s on-chain volume jumped by 57% and Ethereum’s by 181%, though Bitcoin’s on-chain volume is still 30% larger than Ethereum’s. However, when stablecoins are added, the 30-day moving average on-chain volume of Ethereum is about 1.6 times that of Bitcoin. The stablecoin supply alone grew 34% from December to $37 billion. Meanwhile, Bitcoin miner revenues hit $1.1 billion, the second-highest monthly revenue of all time, just after December 2017. Ethereum miners saw revenue of $830 million, a new all-time high.
CME ETH futures are launching next week, and that’s made quite a number of investors bullish on ETH. According to Business Insider, this week, the second-largest crypto by market cap hit a record high of $1,698.56. DeFi tokens also rode ETH’s coattails, with the coins of Chainlink, SushiSwap, and Aave hitting record highs on Wednesday or Thursday.
Just before press time, it was reported that Yearn suffered a hack, with $2.8 million stolen by an attacker out of the version 1 yDAI vault, which in total lost $11 million. Aave founder Stani Kulechov tweeted shortly afterward that the exploit required 160 nested transactions that took advantage of multiple DeFi protocols and cost more than $5,000 in gas fees.
PayPal CEO Daniel Schulman, in the firm’s Q1 earnings call, revealed that the company intends to create a department dedicated to crypto services. He also noted “everyone who signed up for crypto is opening up their app two times as much as they previously did.”
In Visa’s Q1 earnings call, CEO Al Kelly said Visa could use crypto networks for payment and that the firm was working with wallets and exchanges to enable users to purchase crypto assets with their credit cards. He added, “It goes without saying to the extent specific digital currency becomes a recognized means of exchange, there’s no reason why we cannot add it to our network, which already supports over 160 currencies today.”
CoinDesk reports that the IBM blockchain team is “down to almost nothing,” citing four anonymous sources. The company’s blockchain unit had greatly missed revenue targets two years running and had undergone a number of firings for business reasons. One ex-IBM source estimated that the team was down to 10% of its former self. Also, the previous head of blockchain at IBM, Jerry Cuomo, now works on artificial intelligence. CoinDesk writes, “Looking back to its 2017 financial statement, IBM called itself the ‘blockchain leader for business.’ All mention of the technology is now absent from the company’s statements.” An IBM spokesperson said, “IBM maintains a strong team dedicated to blockchain across the company.”
The Forbes Blockchain 50 editorial package has a number of great articles, including a roundup on everyone’s favorite topic: Bitcoin for corporations, with appearances by Michael Saylor and Daniel Schulman, plus a Q&A with Anthony Scaramucci of Skybridge Capital, which has a Bitcoin Fund. Also, despite what’s happening at IBM, the package describes how enterprises are using blockchain technology, with Honeywell, South African Sappi, and Atlanta’s CONA Services making the list. Finally, the package includes the latest crypto billionaires list, with Coinbase CEO Brian Armstrong coming in at the top with $6.5 billion, FTX CEO Sam Bankman-Fried coming in second at $4.5 billion, Ripple chairman Chris Larsen, who is being sued by the SEC, coming in third at $2.9 billion, Michael Saylor, at $2 billion, ranking fourth, and Binance CEO Changpeng Zhao, aka CZ, coming in fifth at $1.9 billion. Check out the full list to see who else made the cut.
If, back during the election, you were wondering how it was that FTX founder and CEO Sam Bankman-Fried became the second-biggest donor to then-presidential candidate Joe Biden, New York Mag, one of my favorite magazines, has you covered. First, Sam gives his own estimate of his net worth — $10 billion (not the $4.5 billion Forbes estimated). This entertaining profile gets his philosophical thoughts on factory farming with this choice quote: “It’s a chicken being tortured for six to eight weeks so we can spend half an hour eating it.” It then details the vegan’s interest in the Effective Altruism movement, which is his way of trying to achieve the greatest good for the greatest number of people, and runs through the math by which he realized that giving more than $5 million to Biden and pro-Biden groups would have a greater impact than knocking on doors in swing states. And, of course, it takes us through his presidential election prediction market wins and losses, which he reveals resulted in a “nontrivial” profit. Definitely a fun read about one of the more notable characters in the crypto space.