Cryptocurrency exchange Coinbase has listed on the Nasdaq with an initial market value of US$100 billion (AU$129.5 billion) in a major breakthrough for the cryptocurrency sphere.
Also read: What Coinbase listing means
It listed at US$381 per share - 52 per cent above its reference price, with that valuation meaning it was more valuable than General Motors and close to that of Goldman Sachs.
Coinbase’s listing has been described as a “watershed event”, in that it ties the legacy financial sector to the world of cryptocurrency, Wedbush analyst Daniel Ives said.
The exchange marked a US$1.8 billion first quarter revenue a few weeks ago and has some 43 million verified users.
It makes its money by taking a slice of all transactions made on the platform. That means its financial success is often closely tied to the value of Bitcoin and Ethereum, both of which have rocketed to record highs in recent days.
However, Coinbase fell as much as 19 per cent from that opening valuation, taking price per share to US$310, before closing down 13.84 per cent with a value of US$328.28 per share.
"Look, this is the brokerage industry — it's not new. Coinbase is not reinventing the wheel here in any way. They are just trading a new product. There is no reason that the New York Stock Exchange or Nasdaq couldn't also potentially trade crypto."
Trainer said Coinbase will face challenges in the form of new competitors, including investment banks, and rivals potentially cutting transaction fees to zero.
He said investors expecting staggering growth over the coming few years will be disappointed.
"We think everybody that can trade crypto will want to get in and get a piece and you will see a race to the bottom in terms of margins like what we have seen in stock grading, which is zero commission,” he said.
“So the idea that Coinbase would grow revenues 150 per cent — to the combined revenues of Intercontinental Exchange and Nasdaq — while also having margins that are 40 to 50 times higher, we just think that means it's [the company] is expensive. Not to say it's a bad product or a bad company, it's just a little expensive right now."