Key Talking Points:
- Coinbase listing sparks cryptocurrency buying frenzy
- Expect the crypto market to be highly volatile during today’s session
The crypto market is booming this morning ahead of the Coinbase direct listing on the Nasdaq, with Dogecoin (DOGEUSD) leading the gains, surging over 80% to almost 14 cents per coin just before the London market open. The “memecoin” was originally started as a joke to mock the craziness of the cryptocurrency market, but in a similar fashion to the Wall streets Bets Reddit frenzy last month, investors were determined to get Dogecoin above 10 cents per coin.
DOGE/USD Daily Chart
Other cryptocurrencies are following suit with gains ranging between 2% and 11% in the most commercialized coins. Bitcoin cash is up over 11% this morning, followed closely by EOS (+8%) and NEO (+5%).
The main reason behind this latest crypto frenzy seems to be the Nasdaq listing of Coinbase, the largest crypto exchange in the US, which will take place later this afternoon. The target price is set at $250, which would entail a market valuation of $47bn, but unlike with an IPO, the company is not looking for a valuation of its shares, but rather it is directly listing with a set reference price.
Instead of having a bank underwrite the listing and come up with buyers for the shares at an IPO price, the company is opening up its shares directly to the public instead. Given the share is able to open at a different price than its set reference, it is likely to be a highly volatile event and I would expect there to be more upside volatility. Even if there is a dip on the first day of its trading, it is likely to be short-lived.
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Bitcoin, the largest and most-known cryptocurrency, continues its steady rally and is now comfortably settled above the $60,000 mark, an area of tough resistance prior to this week. Bitcoin is likely to have its destiny tied to Coinbase today so expect price to surge higher if Coinbase starts trading way above its reference price. In its usual domino effect, expect most coins to be on the high if Bitcoin jumps higher as they are seen as cheaper proxies to Bitcoin.
— Written by Daniela Sabin Hathorn, Market Analyst
Follow Daniela on Twitter @HathornSabin