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Coinbase Eyes Goldman Sachs To Spearhead Its IPO

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Cryptocurrency exchange, Coinbase made news throughout the year. The exchange invaded the headlines for all the wrong reasons. The Brian Armstrong lead exchange suffered an array of outrages, especially while Bitcoin was recording a surge. This time, however, the exchange made headlines following a series of developments it was engaging in. Starting from news pertaining to the Rosetta developer’s grants to its recent activity in the IPO section.

Coinbase’s Ties With Goldman Sachs

Almost all the platforms in the crypto universe have been bolstering the mainstream adoption of crypto. Coinbase seems to be jumping on to the bandwagon. The exchange recently revealed that it had urged the prominent investment banking company, Goldman Sachs to spearhead its imminent IPO aka initial public offering. The San Fransisco based exchange’s connection with the banking giant goes way back as the co-founder of Coinbase, Fred Ehrsam was reportedly a part of Goldman Sachs from 2010 to 2012.

This news comes out a day after the exchange revealed its intentions of going public. A draft registration addressed to the SEC had shed light on the exchange’s latest move. While the exchange was valued at around $8 billion back in 2018, a recent report from Messari, a crypto analytics platform, suggested that it could be worth $28 billion post its offering.

Coinbase Commerce’s Latest Addition

In a recent tweet, the exchange pointed out that its subsidiary, Coinbase Commerce had incorporated an invoicing feature into its system. Making it available for over 8,000 merchants, sending an invoice got a lot easier. The tweet read,

“Invoicing on Coinbase Commerce is now available. Merchants can easily create and send crypto invoices that customers can view and pay online. We’re building simple crypto payment tools to help merchants achieve their business goals. Learn more here: http://commerce.coinbase.com”

While several lauded the exchange for its developments, a few others infiltrated the comment section with issues pertaining to the cryptocurrency exchange’s website. Several members of the crypto community suggested that San Fransisco based exchange was trying to become more like a bank as opposed to a cryptocurrency exchange.

JPMorgan’s Bitcoin Flip Complete With a Bullish Report

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JPMorgan Chase, the largest bank in the United States and once the biggest critic of Bitcoin, now seems to have completely changed its mind. Besides, JPMorgan’s Bitcoin flip seems to be sitting well at the price of the world’s leading cryptocurrency. Bitcoin is on the rise again and has already added about $200 after dropping to $9,000 price level recently.

In the past, Jamie Dimon, CEO of JPMorgan Chase, labeled Bitcoin a fraud. Damon also described the obsession in BTC as a tulip bulb. However, it appears that the large financial institution is switching its stance towards the world’s top virtual asset by market capitalization.

 

JPMorgan Chase vs. Goldman Sachs

According to a new report published by JPMorgan Chase, the bank’s researchers describe Bitcoin as ‘mostly positive,’ stating that it has ‘longevity as an asset class.’ This is the complete opposite of what JPMorgan’s huge rivals, Goldman Sachs noted in their latest clients’ call for bitcoin and gold. According to Goldman Sachs, bitcoin is a poor investment, adding that BTC is not in any way, shape, or form an asset class.

The report by JPMorgan read:

“Though the [bitcoin] bubble collapsed as dramatically as it inflated, bitcoin has rarely traded below the cost of production, including the very disorderly conditions that prevailed in March.”

In March, the price of Bitcoin came tumbling down, resulting in the flagship cryptocurrency losing about 70 percent of its value. A month before the March crypto market crash, Bitcoin was trading well above the $10,000 mark. A few weeks later, the price dropped significantly to slightly hit the $3,000 price level, heartbreaking many investors across the world. Many traders and investors were wondering whether 2018 was being replicated all over again.

Nevertheless, this wasn’t the case this time around. Within thirty days, the top cryptocurrency had managed to recoup almost all it had lost with its price action; slightly reaching the $10,000 mark in both May and June. Those quick reflexes to regain a 70 percent loss amid an economy ravaging pandemic should not be downplayed.

What next after JPMorgan’s Bitcoin flip?

The latest report is another step towards a longstanding JPMorgan’s Bitcoin flip. In 2019, reports surfaced that the financial institution provides banking services to some of the largest cryptocurrency exchanges in the United States, such as Coinbase and Gemini. The report further states that:

“There is little evidence of run dynamics, or even material-quality tiering among cryptocurrencies, even during the throws of the crisis… [Bitcoin] price action points to their continued use more as a vehicle for speculation; than a medium of exchange or store of value.”

Goldman Sachs’ Negative Comments About Bitcoin Riles up the Community; Winklevoss Twins Come to Forefront

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The cryptocurrency market is no stranger to backlash from mainstream communities and establishments. Many have come forward over the past few years claiming that assets like Bitcoin are speculative and that holdings will lose their value sooner than later.

Goldman Sachs was the latest banking institution to attack Bitcoin and its characteristics by pointing at its rollercoaster price movement. Claims that the world’s largest cryptocurrency was “not an asset class” did not go down well with crypto supporters who took to social media to voice their concerns. 

On Wednesday, Goldman Sachs stated that there was no use case for Bitcoin because of its starkly speculative nature. Compared to the promise and reassurance of fiat currency, cryptocurrencies depend on other people buying and selling their assets, said the American bank. The bank’s officials concluded that cryptocurrencies, in general, were not an asset class as it primarily depended on whether “someone else was willing to pay a higher price for it”.

Goldman Sachs made their discussions public ahead of an investor call addressing the impact of the coronavirus on the economic front. The release from the organization said:

“We believe that a security whose appreciation is primarily dependent on whether someone else is willing to pay a higher price for it is not a suitable investment for our clients. We also believe that while hedge funds may find trading cryptocurrencies appealing because of their high volatility, that allure does not constitute a viable investment rationale.”

Cryptocurrency enthusiasts were miffed with the latest comments from the bank as they expected a positive turn from Goldman. Their positive expectations were based on the fact that other major institutions like Fidelity had already dipped its toes into crypto and blockchain technology. Goldman Sachs even compared Bitcoin’s 2017 bull run to other bubbles in the past, adding that the digital asset industry was not based on any solid foundation.

Despite the negative feedback, Bitcoin surged on the charts as it crossed the $9500 market for the first time in weeks. At press time, BTC was trading for $9500 with a total market capo of $174.69 billion. The 4 percent hike over the previous 24-hours had increased the daily trading volume to $36.46 billion. Overall it was a good week for Bitcoin as the weekly gain also treaded in the bull region.

Several cryptocurrency enthusiasts came forward to support Bitcoin, with none being more vocal than the Winklevoss twins. The co-founders of Gemini stated that Goldman Sachs needed to update its arguments against Bitcoin as it felt extremely dated. They even opined that the current comments may be a method employed by the bank to head fake those following the updates.

Goldman Sachs Dismisses Bitcoin as an ‘Asset Class’; Crypto Twitter Fires Back

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Goldman Sachs’ analyst team just became the No.1 public enemy for much of the Bitcoin community. Under the given market dynamics, it was suggested that the largest digital asset is not a good investment opportunity, according to the company’s latest client conference call on May 27th, which also included Bitcoin‘s topic.

According to the revealed Slideshow, it was indicated by Goldman Sachs that Bitcoin is a not legitimate asset class because unlike bonds, the digital token does not generate cash flows. It was also suggested that the asset does not ‘provide consistent diversification benefits’ given they are uncorrelated to the traditional asset class.

Sharmin Mossavir-Rahmani, Chief Investment Officer for wealth management said during the conference call,

“We also believe that while hedge funds may find trading cryptocurrencies appealing because of their high volatility, that allure does not constitute a viable investment rationale.”

The event was hosted by Goldman Sachs’ Investment Strategy Group, which is a part of the bank’s wealth management division that caters to high net worth clients and advises them on asset allocations.

Crypto Twitter unimpressed by Goldman Sachs

It goes without saying that Goldman Sach’s argument did not sit well with the Bitcoin community. Some of the reputed analysts in the space took keen notice of the criticism. Ryan Watkins of Messari stated,

“The criticisms were very cookie-cutter, the type you’d expect if someone just read mainstream headlines. It’s like they didn’t fully diligence the asset.”

Tyler Winklevoss, CEO, and Co-Founder of Gemini exchange had scathing remarks for the state of Wall Street amidst the Bitcoin comment. He said,

Additionally, Goldman Sach’s cash flow argument was peculiar as identified by Tom Masojada, Co-Founder of OVER Digital Asset Exchange. He highlighted that a list of investments labeled ‘suitable for clients’ by Goldman Sachs in the past did not generate cash flows and they were dependent on whether the client was willing to pay a higher price on a later date.

 

The current debacle will possibly gain more traction in the coming weeks as other proponents in the space with opined on Goldman Sach’s statement.