Buy Low, Sell High
Coinbase, founded in 2012, is one of the most well-known and popular cryptocurrency exchange sites in the world (Investopedia, 2021). Organizations hoping to sell their cryptocurrency to investors consider a listing on Coinbase to be a major win. When a crypto is listed on Coinbase, the event often creates enough buzz that, at least temporarily, the crypto’s price per coin will increase – sometimes substantially. A whole new generation of day traders keep close track of when cryptocurrencies will make their Coinbase debut. Buy low, sell high.
Last April, 2021, Coinbase went public and was the first major crypto exchange in the United States to do so. Coinbase shares are traded on Nasdaq; their stock ticker symbol is, quite fittingly, COIN (FastCompany, 2021). Coinbase’s route to becoming publicly traded was not your typical Initial Public Offering or IPO. Instead, Coinbase chose direct listing, with shares being sold by its employees and existing investors.
On its first day as a publicly traded company, shares of COIN reached a high of $328 (its reference point was $250). As of this writing, COIN’s all time high was around $425 (New York Times, 2021).
On Friday, June 25, COIN closed at $224.54 (Charles Schwab, 2021). Why is it down, and should we be worried that COIN’s stock price is well below the all time high? Maybe, but crypto prices have been down a bit as well, and history tells us that
1) crypto prices are extremely volatile, and
2) there may be no worse feeling than selling your large volume of crypto (or stock) at a low price or loss only to watch it skyrocket the next day, week, month, or year (e.g., Bitcoin).
So, what to do? Before moving forward, I do need to tell you that I am not giving out financial advice. I am not a stock broker, and I have won and lost in the stock market over the years just like many others. I have not (yet) lost on cryptocurrency – but I only buy crypto when it is uber cheap or has a clear future.
With all of that said, the ups and downs in cryptocurrency prices can be good for the market and can offer would be investors a chance to get in at prices they consider closer to their tolerance for risk. According to the Motley Fool (2021), those considering “buying on the dip” should know their risk tolerance, only invest what they can afford to lose, understand the importance of a balanced portfolio, and recognize that cryptocurrency is not a “get rich quick” scheme (and neither are stocks).
Circling back to the decrease in COIN share prices, personally, I think the price of COIN is going to explode (but, again, I don’t give financial advice and I am not recommending you run out and buy it). But here is why I am bullish on COIN: First of all, not that many people know very much about cryptocurrency. It is hard to fully understand, especially when there are so many of them floating around on the market. Secondly, cryptocurrency, crypto wallets, and exchanges where crypto can be bought, sold, held and staked, are still very new concepts to a lot of people. Companies like Coinbase and Finnovant will play prominently in the space for many years to come, Lastly, finding information about crypto that does a good job of explaining it can be a gigantic challenge. That leads me to another prediction - someday in the very near future, someone will write a book or start a blog that explains cryptocurrency in laymen’s terms. This will help the average investor make wise decisions about what cryptocurrency to buy and when to buy it, and why investing in a company like Coinbase is probably a good idea.
Charles Schwab (2021). Client home. https://www.schwab.com.
FastCompany (2021). Coinbase stock joins the Nasdaq today: Here’s what to know about COIN. https://www.fastcompany.com/90625256/coinbase-stock-joins-the-nasdaq-today-heres-what-to-know-about-coin
Investopedia (2021). Best crypto exchanges. https://www.investopedia.com/best-crypto-exchanges-5071855#:~:text=Best%20Overall%20Coinbase%20and%20Coinbase%20Pro&text=The%20most%20widely%20known%20and,the%20United%20States%20is%20Coinbase
Motley Fool (2021). Bitcoin falls to a 3-month low. Should you buy on the dip? https://www.fool.com/the-ascent/buying-stocks/articles/bitcoin-falls-to-a-3-month-low-should-you-buy-on-the-dip/
New York Times (2021). Coinbase valued at $86 billion in ‘landmark moment for crypto. https://www.nytimes.com/live/2021/04/14/business/stock-market-today