Yerevan (CoinChapter.com) — Bitcoin looks to capitalize further on Coinbase’s latest foray into Wall Street even as the cryptocurrency already trades inside alarmingly overvalued areas.
The benchmark cryptocurrency, which almost came closer to hitting $64,500 ahead of the London morning bell, following a supersonic overnight rally, awaits further bullish confirmation from mainstream markets. The analogy surfaces from the latest tweet from Frank Chaparro, the director of news at the Block, who claims Robinhood would list Coinbase shares (Ticker: COIN) on its trading platform following its listing on the Nasdaq Stock Market this Wednesday.
“Source tells me that Coinbase ($COIN) will be trading on Robinhood tomorrow after trading officially kicks off,” Mr. Chaparro tweeted.
The Coinbase FOMO
In retrospect, Coinbase is set to become the world’s first cryptocurrency firm to go public. Analysts anticipate that it would fetch a valuation worth $65-100 billion, with Nasdaq setting a reference price for its COIN stocks at $250 per share. On the FTX platform, the stock’s implied valuation has already reached $580.
Coinbase has amassed massive revenues following Bitcoin’s breakthrough rally after a coronavirus-led global market crash in March 2020. Last week, the company reported its first-quarter earnings, stating that it made between $730 million and $800 million. That is more than double what it made during the entire 2020.
Speculators have raised their bids on Bitcoin on Coinbase euphoria. The cryptocurrency climbed by almost 120 percent year-to-date after it settled a record high near $64,896 on Wednesday. Therefore, if Coinbase’s earlier trades on Nasdaq attract higher bids from investors, as well, it would most likely prompt traders to do the same for Bitcoin.
The reason is straightforward: when institutional investors bid higher for a stock, they expect the company backing that stock to do well quarter after quarter. It shows their trust in the company’s business model itself. Therefore, a growing COIN share means that investors expect Coinbase to generate better revenues from its bitcoin and other crypto trading services.
The inclusion of Robinhood brings the retail factor into the discussion. It increases the likelihood of small investors to collectively pump the Coinbase stock, same as they did in the case of Gamestop earlier this year. A retail-led buying mania would indirectly benefit Bitcoin.
“I wouldn’t be surprised if retail traders pump COIN way above the reference price of $250 a share,” said Mr. Chapparo. “But we shall see.”
Bitcoin suffers from overvaluation risks, nonetheless. The cryptocurrency’s Relative Strength Index readings on higher timeframes stand above 70. It increases the possibilities of a neutralizing downside correction in the coming weekly sessions. Should it happen, the BTC/USD exchange rate could fall to its interim support level of $59,000.