Bitcoin surged dramatically on Thursday after Coinbase, one of the world’s largest cryptocurrency exchanges, filed to go public via a direct listing on Nasdaq, adding fuel to the ongoing crypto boom among institutional investors and corporates.
The US-based company noted that it expects to incur higher operating expenses in the foreseeable future. That may hamper its ability to achieve profitability in absence of adequate cash flows consistently. Therefore, to achieve substantial liquidity, it is going to list its Class A Shares in public for sale and purchase.
“Our business and operations have experienced significant growth, and if we do not effectively manage our growth, or are unable to improve our systems and processes, our operating results will be negatively affected,”wrote Coinbase in its S-1 filing with the Securities and Exchange Commission.
Coinbase revealed that it generated a net income of $322.3 million in 2020. But in 2019, the firm faced losses worth $30.4 million. Overall, it earned a net revenue worth $3.4 billion since inception, subsequent to the growth in the cryptocurrency markets.
Investors pointed to the filing as a breakthrough moment in the crypto space. Many anticipated that it would lead to further higher adoption for cryptocurrencies like Bitcoin as Coinbase would offer institutional investors an indirect exposure to the volatile market via its shares.
“If [traditional investors are] more comfortable investing in stocks and putting their money behind a company with cash flow, a board of directors, and the whole traditional infrastructure, they’ll appreciate the opportunity to bypass crypto volatility and invest in Coinbase stocks instead,”Chris McAlary, CEO of bitcoin ATM operator CoinCloud, noted.
BTC/USD surged above $51,000 after the Coinbase news entered the wire. It was targeting an extended bull run above $51,500 but met with a moderate selling pressure near the area.
Earlier in the week, Bitcoin was wobbling between $47,000 and $52,000 after crashing from its record high above $58,000. Analyst now expects the cryptocurrency to log another bull run towards its previous peak.