After the approval of the Bitcoin spot ETF by the U.S. Securities and Exchange Commission (SEC) in January, the cryptocurrency market has been soaring. The market value of Coinbase, a U.S.-listed cryptocurrency exchange, has also risen accordingly. The market value of Coinbase surpassed $50 billion this week and has surpassed the Hong Kong Stock Exchange, making it the fourth-largest listed exchange in the world.
Bitcoin has been rising recently, reaching a high of $64,000 this morning, the highest since November 2022. The high trading volume caused Coinbase to experience a system outage in the morning, with some users unable to access their accounts and even experiencing zero account balances.
Despite some users complaining in the community, Coinbase is still one of the big winners in this bullish market. Its stock price has risen by 28% this year and its one-year gain is as high as 210%, bringing its market value to $48.649 billion, surpassing the Hong Kong Stock Exchange and becoming the fourth-largest listed exchange in the world.
According to Hong Kong Ming Pao, the Hong Kong Stock Exchange has been the world’s largest listed exchange in terms of market value for most of the period from 2005 to 2008. Even at the end of 2022, it still had a market value of approximately HK$427.5 billion (about $55.58 billion), leading the London Stock Exchange and ranking third globally. However, with the weakness of the Hong Kong stock market, its stock price and market value have been continuously shrinking. As of the end of December last year, the market value of the Hong Kong Stock Exchange had fallen to approximately HK$339.8 billion (about $43.25 billion), falling behind the London Stock Exchange and ranking fourth globally. Today, the Hong Kong Stock Exchange closed at HK$244.20, with a current market value of HK$309.6 billion (about $40.25 billion), a decrease of more than 27% compared to the market value of $55.58 billion at the end of December 2022. Compared to the record high stock price of HK$567 in February 2021, it has fallen by more than 50%.
Bloomberg data shows that as of December last year, the Hong Kong Stock Exchange had a forecasted price-to-earnings ratio of 26.94, which is higher than most global exchanges. Among the major listed exchanges, Coinbase has the highest forecasted price-to-earnings ratio of 124.
Wen Jie, Head of the Asia Investment Strategy Department at KGI Securities, analyzed that the introduction of the Bitcoin spot ETF in the United States has attracted retail investors’ participation and attracted a large amount of capital inflow into the related cryptocurrency exchange market, while the performance of the Hong Kong stock market in recent years has been inferior to other markets. At the same time, the trading volume of the Hong Kong stock market has been lower than before, directly affecting the Hong Kong Stock Exchange, which relies on market transaction volume for 70% of its revenue, leading to a decline in its profit and valuation, and a simultaneous decline in its market value.
In contrast, benefiting from the recovery of the cryptocurrency market, Coinbase’s trading revenue in the fourth quarter of last year increased by 64% to $529.3 million, and it turned a profit for the first time since 2021, with a net profit of $273.4 million in that quarter. Its revenue for the first quarter of this year is expected to further grow.
Brian Armstrong, CEO of Coinbase, stated last week that the Bitcoin spot ETF has released new capital inflows into the cryptocurrency field, and Coinbase has seen tremendous demand. Now, every institution is starting to hold cryptocurrencies, which will become an indispensable part of every diversified investment portfolio.
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