Hey Five Star Trader,
Today I want to talk to you about Coinbase. As of a few days ago, Coinbase announced it’s going public and it’s been making waves in the market ever since. But what is Coinbase, should you invest in it, and what are the risks involved?
What is Coinbase?
Coinbase was a company originally founded in 2012
Am I in on Coinbase?
The short answer is yes.
With so many companies going public, it’s hard to know which to invest in, but for me, it’s down to a few factors. I like to invest in companies that are unique, have brand name recognition and are industry disruptors.I also like to see that those companies have been around long enough, have a history of success and growth and the likelihood for that growth to continue. Coinbase fits the bill.
For a deeper understanding of the kind of SPACs I look for, click here.
Coinbase created the ability for regular consumers to buy cryptocurrency on an app long before most people even knew what cryptocurrency was. Throughout this time, they scaled and built their brand, becoming the best known option for those wanting to invest in cryptocurrency. They made it simple and easy, and word spread. For the lucky investors that bought into the idea of cryptocurrency before it became mainstream, Coinbase was there. The last time the three most popular coins, Bitcoin, Ethereum and Litecoin started reaching parabolic heights in 2017, and then again in 2019, everyone wanted to know, ‘But where can you buy these coins?’ Coinbase was the answer. Since these moments of extreme interest, the app has only expanded in popularity and become mainstream. After the fact, late coming competition has tried to break into the space, but, like Airbnb, they were first, they’ve had almost 10 years to expand and innovate, long before hedge funds and S&P 500 companies began buying cryptocurrency.
Can Coinbase continue to grow?
Currently, the hype around cryptocurrency is the highest it’s ever been. But, the macro conditions are different this time. Before, the rush to buy bitcoin was looked at with suspicion, and disregarded as another hype like tulip mania. Now, we have a government that continues to devalue the dollar with continued stimulus’. We have hedge funds and S&P 500 companies like Tesla investing in bitcoin. It’s no longer considered what it once was. This will be the main driver behind Coinbase’s continued growth. All of the people who discounted cryptocurrency before will begin to see it as a real solution towards their devaluing dollars. I don’t see a lot of risk with this one, but I suppose the main risk is getting lost in a sea of SPACs and IPOs that have flooded the market. However, I think the brand is on solid footing and I don’t find it to be much of a concern.
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