Coinbase Could Become an ‘Index Play’ for TradFi Investors to Enter Crypto, Says Analyst
One of the top crypto exchanges, Coinbase, has proven its stance in the industry, creating a formidable and trustworthy name. An analyst and co-founder of Reflexivity Research, Will Clemente, thinks Coinbase will be a gateway ushering traditional finance (TrdaFi) investors into the broader crypto market.
He says the crypto exchange could operate as an index play" for TradFi companies seeking more elaborate exposure to the crypto sector.
High Potential Benefits From Coinbase To Traditional Finance FirmsThe recent X Space hosted by Bitcoin bull Anthony Pompliano on December 21 had Clemente on the show. He noted how COIN, the Coinbase shares, will benefit TradFi firms.
Clemente stated:
I think TradFi will probably view COIN [Coinbase] as kind of an index play on crypto because they have so many kinds of vertical now.
- Pomp
(@APompliano) December 21, 2023
Further, the analyst talked about the safety of Coinbase (COIN) and its potential to serve as an alternative to BTC. He said,
Someone might come in the space and say, I bought some Bitcoin, I don't really know which of these other assets to pick; Coinbase feels like a pretty safe kind of index style play.
Additionally, Clemente mentioned that Wall Street sees Coinbase with an ordinary indication as an exchange. He highlighted that the exchange had made several achievements that would boost its revenue.
These include its staking program, acquisitions of a portion of Circle, and emerging as a Bitcoin ETF custodian.
Moreover, in August, Coinbase rolled out its Ethereum layer-2 scaling network, Base. The chief investment officer of crypto asset manager Bitwise, Matt Hougan, was also on the X Space.
He was optimistic about Coinbase's level of progress in the industry and potential innovative moves in the future.
Hougan mentioned:
I think Coinbase is executing better than any financial services company in America.
Recall that Bitwise forecasted a double on Coinbase's revenue in 2024. However, Hougan has a higher expectation, stating that revenue doubling is just a tip of the exchange's possibilities. He believed that it could accomplish more next year.
Coinbase Still Battles With SEC's Lawsuits and Other Impending IssuesDespite its exciting developments, Coinbase still faces some issues both within and outside the industry.Its legal battle with the US Securities and Exchange Commission (SEC) is still far from over.
Moreover, some US lawmakers are opting for bills that would suppress crypto activities in the country and impact its operations negatively.
Additionally, Coinbase's layer-2 network, Base, has recorded some attacks shortly after its launch. The prominent ones include the Magnate Finance rug-pull involving $6.5 million and the RockSwap hack of $865,000.
Further, Cathie Wood's ARK Invest has recently been disposing of its holdings of Coinbase shares.
On December 5, it sold about 237,000 COINs worth $331 million from its three different funds. Data from ARK CEO Cathie Wood's website noted that several transactions involving the sales of COIN.
Notably, the company's ARK Innovation ETF disposed of more than 900,000 Coinbase shares in December.
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