Coinbase could serve as TradFi’s ‘index play on crypto’ — Analyst

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Correction: This article was corrected on Dec. 22 to reflect that it was Will Clemente who suggested Coinbase shares will likely serve as an “index play” for traditional finance firms, not Blockware’s Mitchell Askew.

Coinbase shares could serve as an “index play” for traditional finance firms looking for a way to gain broad exposure into the cryptocurrency sector, says Reflexivity Research co-founder Will Clemente.

“I think TradFi will probably view COIN [Coinbase] as kind of an index play on crypto because they have so many different kinds of verticals now,” Clemente said in a Dec. 21 Space on X (formerly Twitter) hosted by Bitcoin (BTC) bull Anthony Pompliano.

“Someone might come in the space and say, I bought some Bitcoin, I don’t really know which of these other assets to pick; Coinbase feels like a pretty safe kind of index style play,” he added.

https://t.co/3lmo5KzWVs

— Pomp (@APompliano) December 21, 2023

Meanwhile, Matt Hougan, the chief investment officer of cryptocurrency asset manager Bitwise, who was also on the X Space, shared optimism over the future of the exchange. 

“I think Coinbase is executing better than any financial services company in America.”

Bitwise recently predicted that Coinbase’s revenue would double in 2024, but Hougan thinks it may exceed that: “I almost wonder if their revenues doubling will be too low. So we have a lot of conviction in that.”

Bitwise operates a Bitwise Crypto Industry Innovators exchange-traded fund (ETF), which holds Coinbase shares.

“Wall Street very much views Coinbase as just a pure exchange,” added Clemente, but noted that it has launched other revenue verticals such as staking, becoming a Bitcoin ETF custodian and acquiring part of Circle. 

Coinbase also launched its Ethereum layer-2 called “Base” in August.

Related: Bitwise launches crypto ETF media campaign with ‘The Most Interesting Man in the World’

However, Coinbase is still battling a hard-fought lawsuit with the United States Securities and Exchange Commission, and several U.S. senators are passing bills to restrict cryptocurrency activity in the U.S., which could impact Coinbase.

Base has also been home to a few hacks and exit scams since its launch, including the $6.5 million Magnate Finance rug-pull and the $865,000 exploit on RockSwap.

Meanwhile, Cathie Wood’s ARK Invest also offloaded 237,000 Coinbase shares worth $331 million across three separate funds on Dec. 5.

According to data from the official website of ARK CEO Cathie Wood, The firm’s ARK Innovation ETF has sold off over 900,000 Coinbase shares since December.

Update Dec. 22 at 5:44 am UTC: Updated article following clarification from Mitchell Askew that the comments came from Will Clemente.

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