What Coinbase’s IPO means for the crypto market, Bitcoin nears record

Bitcoin nears an all-time high ahead of Coinbase’s direct listing on Wednesday. Yahoo Finance’s Zack Guzman, Myles Udland and Brian Sozzi break down the details.

Video Transcript

- Bitcoin prices are flirting with the $60,000 level, again, at a Coinbase's market debut this week. The largest US crypto exchange is set to debut at the NASDAQ on Wednesday via direct listing. Yahoo Finance anchor Zack Guzman is here for more on this one. Zack, it certainly seems as though all the planets are aligned for Coinbase on its direct listing today.

ZACK GUZMAN: Yeah, I mean, it's hard to think about a time that they could have chosen that would have been better than this, Sozz. But, I mean, backing up a step, right? We all know that that's going to be a big catalyst because of the numbers so far that Coinbase has already shared. Obviously, a lot of investor demand around that direct listing we're going to get on Wednesday. But beyond that, there is a lot of enthusiasm, right now, momentum building, shall we say, around Bitcoin ETF applications.

Out this morning was Mike Novogratz's Galaxy Digital filing for their own Bitcoin ETF. That now makes it, at least, 10 that I'm aware of that we're aware of here at Yahoo Finance that have been filed. Two of which have been mentioned there by the SEC in terms of which ones they're going to have to weigh in on. VanEck, the first in that list.

And when you think about that, I mean, obviously, we've been talking a lot about Coinbase, and the users on that platform, the retail side of the growth in crypto. But as we increasingly look at institutional investors, Bitcoin ETFs are pretty huge. We've already seen about a billion dollars flow into the one in Canada that got approved. That's given a lot of hype and hope around what could happen here in the US, and what the SEC is going to say about these 10 applications.

But Sozzi, I mean, that's going to be a fire hose if one of those does get approved. You've got to think that the other nine on that list probably would follow soon after, and what that means could be huge for the amount of money that would flow into Bitcoin and some of these other ETFs being floated out there. So yes, not only Coinbase, right now, as a catalyst, but also, some pretty big institutional dollars that are waiting there if one of these ETFs should get approved by the SEC.

- And, you know, Zack, it makes me think about the direct listing coming up from Coinbase, and I've been thinking about this since they filed, since we knew they were going to file. Now, the day is kind of here. I mean, at this point, is Coinbase the best sort of de facto ETF, right? Is it the best kind of levered tracking stock to the price of crypto that gets you your exposure, but you don't have to actually deal with the custody issues, the compliance? It's just a regular, old stock. And if you have the mandate to buy US listed stocks, well, then Coinbase is going to fit right in there.

- I think we're getting to the point, Myles, where we're going to find out the answer to that question rather shortly, right? Because people could look at Coinbase. I myself and others here have talked about it kind of being the way to invest in the picks and shovels in this craze, right?

And you think back to the gold rush, and there's some truth to that. Obviously, they make fees on each transaction, whether or not it's going up or down. If you have people buying or selling Coinbase, it's going to profit, so volatility might be good, right?

We talk about the markets and the traditional stock market. The exchanges tend to benefit from volume boosts, but when we talk about crypto itself, I think we're getting into a very interesting chapter here. Because we already have companies, like MicroStrategy, Tesla, adding it to their balance sheets, which makes them effectively, also, a crypto play as well. And it depends what investors are going to want to target.

Obviously, there would be more clean ways to target one of these specifically. If you're looking at Bitcoin, obviously, a Bitcoin ETF seems to be the best play there. But when you broaden out, all of these things in general tend to trade in lock step, right? When we think about Bitcoin and the way that will trade generally has an impact on the alt coins as well.

But the farther and farther along we, go you have to expect that some of these are going to start to break off once these projects get a little bit more developed, and you start to see how these things are getting built out. Particularly, you point to stable coins and what we've seen there in the Winklevoss Twins trying to build out. I think we're starting to get into a space, where we're going to see these eventually break.

We're going to have things break from each other and trade on their own. The correlation at coefficients might not be so large, but yeah, you're right. I think, at some point, we're going to start to see this space mature. I think the ETF might be one step for people to kind of try and target maybe Bitcoin versus Ethereum should those follow as well, but I think this week is going to be very interesting.

The Coinbase one, people have been waiting a long time for this. Obviously, a lot of people have been pointing to that as a big catalyst. We'll see what happens Wednesday, but obviously, depending on where that goes, I think it's going to bring a lot more eyeballs to the space, guys.