Analyzing Coinbase: TradFi’s Gateway to Crypto Exposure

Will Clemente, co-founder of Reflexivity Research, suggests that traditional finance firms seeking a means to gain broad exposure to the cryptocurrency sector could utilize Coinbase shares as an “index play.”

“Because they now have so many different types of verticals, I believe TradFi will perceive COIN [Coinbase] as an index play on cryptocurrencies,” Clemente said in a Space on X (formerly Twitter) hosted by Bitcoin bull Anthony Pompliano on December 21.

“An individual entering the market may declare, ‘I’ve purchased some Bitcoin, but I’m not sure which of these other assets to invest in. Coinbase seems like a fairly secure index-style investment,'” he further elaborated.

Concurrently, on X Space, Matt Hougan, the chief investment officer of cryptocurrency asset manager Bitwise, expressed confidence in the exchange’s future.

Recent estimates by Bitwise and Hougan indicate that Coinbase’s revenue could surpass the twofold growth rate by 2024. “At times, I question if a doubling of their revenues would be insufficient. Thus, we hold that with considerable conviction.”

Bitwise manages the Bitwise Crypto Industry Innovators ETF, which is invested in shares of Coinbase.

“Wall Street perceives Coinbase primarily as an exchange,” Clemente continued, noting that the exchange has also expanded into staking, Bitcoin ETF custodial, and acquiring a portion of Circle.

In August, Coinbase also introduced “Base,” its Ethereum layer-2 product.

Coinbase is currently engaged in a protracted legal dispute with the Securities and Exchange Commission of the United States.

Additionally, several senators in the United States are considering legislation that would impose limitations on cryptocurrency operations within the country. These developments have the potential to affect Coinbase.

Since its inception, Base has also been the target of several breaches and exit scams, including the $865,000 RockSwap exploit and the $6.5 million Magnate Finance rug-pull.

On December 5, Cathie Wood’s ARK Invest divested 237,000 Coinbase shares with a combined value of $331 million, distributing them among three distinct entities.

Since December, ARK CEO Cathie Wood’s official website reports that the firm’s ARK Innovation ETF has disposed of over 900,000 Coinbase shares.