[Bitcoin Now] Hovering Around 78 Million KRW... WSJ Says "Coinbase Overvalued"

Temporary Gains Attributed to Bitcoin's Uptrend
Possibility of Regulatory Measures by Various Governments Raised

[Image source=Yonhap News]

[Asia Economy Reporter Gong Byung-sun] While the representative cryptocurrency Bitcoin is hovering around 78 million KRW, concerns have been raised that the corporate value of Coinbase, a major U.S. cryptocurrency exchange preparing for a Nasdaq listing, is overestimated.

According to the domestic cryptocurrency exchange Upbit, as of 4:34 PM on the 13th, Bitcoin recorded 78.53 million KRW, up 0.46% compared to the previous day. After reaching an all-time high of 79.6 million KRW on the 10th, it appears to be taking a breather around the 78 million KRW level.

Concerns have been raised that the value of Coinbase, a major U.S. exchange preparing for a Nasdaq listing on the 14th, is excessively overvalued. On the 10th (local time), the U.S. Wall Street Journal (WSJ) pointed out that if Bitcoin prices fall, trading volume in the cryptocurrency market would decrease, which could also cause Coinbase’s stock price to drop. Last month, the U.S. economic media Bloomberg estimated Coinbase’s corporate value at about 101 trillion KRW, but since current performance is temporary, the corporate value could also decline. Competition with latecomers was also cited as a weakness of Coinbase. WSJ argued that as the cryptocurrency market grows, exchanges more competitive than Coinbase, which currently charges a 3.49% trading fee, could emerge.

In fact, Coinbase’s main source of income is fees, and its performance has fluctuated greatly depending on Bitcoin’s volatility. Coinbase, which recorded a loss of about 30 million USD (approximately 33.756 billion KRW) in 2019, achieved an operating profit of 410 million USD last year. Moreover, the expected operating profit for the first quarter of this year is between 730 million and 800 million USD, surpassing last year’s total operating profit. This is thanks to the sharp rise in Bitcoin during the same period. Bitcoin, which was around 8 million KRW in January last year, reached the 32 million KRW range earlier this year and is currently approaching 80 million KRW. Accordingly, Coinbase’s spot trading volume in the first quarter of this year increased by 1.5 times compared to last year’s total volume, reaching 160 billion USD.

Meanwhile, the possibility of regulations by governments worldwide has also been raised. On the 12th, Jesse Powell, CEO of Kraken, a major U.S. cryptocurrency exchange, predicted in an interview with U.S. economic media CNBC that “regulatory uncertainty regarding the cryptocurrency market still remains” and “crackdowns by governments worldwide will come.” According to cryptocurrency analysis firm Chainalysis, only 0.34% of cryptocurrency cases are involved in illegal activities, but governments worldwide are preparing regulations. The U.S. Commodity Futures Trading Commission is preparing regulations related to cryptocurrency futures trading. The Indian government has implemented a Bitcoin disclosure obligation system and plans to introduce stronger regulations in the future.

On the other hand, opinions that a correction period is imminent have also emerged. According to U.S. media CNN on the 11th, Scott Myer, CEO of Guggenheim Investments, said, “It is clear that there is a bubble as Bitcoin’s market capitalization is soaring, and the price could fall to between 20,000 and 30,000 USD,” adding, “Long-term investors should invest in Bitcoin during this period.” The price range mentioned by CEO Myer is about half of Bitcoin’s current price. He did not specify the exact timing of the correction.