Cryptocurrency value rose sharply toward the end of 2017, resulting in a large influx of non-crypto interest. Institutional investors, elderly residents, millennials, and other large segments of society began pouring funds into cryptocurrency. Some investors have even taken out mortgages and sold off retirement holdings to fund the crypto craze.
Early in 2017, Coinbase received more than $100 million in private funding which they used to expand their operations and ramp up support. Recode reports that early investors are being approached to release their shares to the secondary markets. Coinbase informed Recode that they are displeased by this turn of events.
Because Coinbase is a privately traded company, they are requesting that shareholders refrain from releasing their stock to public traders. In the event that shares are sent to outside investors, Coinbase has stated that they intend to take the appropriate action in case of a shareholder selling against the company’s directives.
Why do investors want to buy into Coinbase so badly?
Coinbase is a six-year-old firm which provides a platform for cryptocurrency trading. In addition to the crypto craze, a trend has been rising in frequency over the last couple of months: businesses are pivoting to blockchain. Because Coinbase is a blockchain company by nature, investors want to buy into it.
Coinbase was expected to capture around $600 million by the end of 2017, but the crypto craze funneled extra funds to Coinbase, putting them over the $1 billion mark for their 2017 annual income.
Not only are many blockchain businesses struggling to become profitable, but several exchanges have been sought out by banks for account freezes and other barriers to operation. Coinbase has been an industry leader in working with regulators to establish clear regulations regarding cryptocurrency, its exchange, and legality.
Coinbase last opened for funding shortly before the crypto craze, and investors fear that they may never open for fundraising again.
How has Coinbase utilized the recent crypto hype to improve their margins?
Coinbase lets users trade a select few cryptocurrencies on their platform. One of the most notable ways that Coinbase expanded their income was by offering support for an alternative cryptocurrency, known as bitcoin cash (BCH). In addition to the extra trading volume in BCH, Coinbase has seen substantial transaction value generated by the stark price increases of BTC and ETH.
Transaction fees and withdrawal fees are one area which has allowed Coinbase to thrive as their user base has grown over the last year. For 2017, Coinbase was the most downloaded application in the Apple App Store, according to TechCrunch. Some days last year, Coinbase had more than 300,000 new user registrations per day.