A Peter Thiel-backed blockchain platform just invested $10 billion in a new crypto exchange

Peter Thiel Chess
  • Peter Thiel-backed Block.one announced it is launching a crypto exchange called Bullish Global on Tuesday.
  • Bullish Global has already landed over $10 billion in backing from big names like Thiel, Mike Novogratz, Louis Bacon, and Nomura.
  • “Bullish’s sheer size and scale combined with Block.one’s experience in high-performance blockchain engineering will make Bullish a formidable player from day one,” Novogratz said.
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Block.one, a blockchain platform backed by the billionaire Paypal and Palantir co-founder Peter Thiel, just invested $10 billion in a new crypto exchange called Bullish Global.

According to a recent press release on Tuesday, Bullish Global is a “blockchain-based cryptocurrency exchange designed to combine the performance, user privacy, and compliance offered by central order book technology with the vertically integrated user benefits of decentralized finance (DeFi) market architecture.”

The cryptocurrency exchange is set to launch this year and will utilize the EOSIO and EOS Public Blockchain.

Bullish will focus on bridging the gap between institutional investors and the crypto space, according to comments from the British billionaire hedge fund manager and Bullish Global investor Alan Howard.

“Successfully bridging the gap between digital assets and institutional actors will shape the future of the financial sector as we witness greater mainstream adoption of digital currencies,” Howard said in a press release.

“I am excited about being involved with Bullish’s mission to give its users more value-added control over their financial future,” he added.

The platform will provide both institutional and retail investors market-making, lending, and portfolio management services in a DeFi (decentralized finance) app without the use of banks as middlemen.

Bullish Global has received $10 billion worth of cash and digital asset backing from the likes of Peter Thiel’s Thiel Capital and Founders Fund, Alan Howard, Louis Bacon, Richard Li, Christian Angermayer, Mike Novogratz’s Galaxy Digital, and Japanese investment bank Nomura.

The funding includes 164,000 Bitcoin valued at around $9.7 billion, $100 million in cash, and 20 million EOS tokens, which power Block.one transactions. An additional funding round raised another $300 million for the operation as well.

Peter Thiel, Alan Howard, Richard Li, and Christian Angermayer will also serve as senior advisors to the company as a part of the deal.

Read more: Fundstrat’s head of digital assets research walks us through his $100,000 and $10,500 year-end price targets for bitcoin and ether – and shares the 8 tokens he’s bullish on

Commenting on the new crypto exchange, Peter Thiel said “Bullish’s balance sheet is strong, and its vertical integration offers stability and liquidity to the cryptocurrency space.”

“I’m happy to join Bullish as an investor and advisor as it gets started on a long and fruitful journey,” Thiel added.

Galaxy Digital’s Mike Novogratz said he was also “excited” for what Bullish Global can bring to the crypto space.

“Bullish’s sheer size and scale combined with Block.one’s experience in high-performance blockchain engineering will make Bullish a formidable player from day one. I’m excited to be on the journey with this team,” Novogratz said.

Block.one has faced headwinds since it ran the world’s biggest ICO netting $4 billion back in 2018.

The company was forced to pay a $24 million settlement to the Securities and Exchange Commission in 2019 to resolve allegations of conducting an unregistered initial coin offering.

Block.one platform has also seen declining developer interest of late, according to a report from Electric Capital, per Bloomberg.

The new deal should help to revitalize Peter Thiel’s blockchain startup and position it to take advantage of growing institutional interest in cryptocurrencies.

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Turkey’s cryptocurrency nightmare worsened after a second exchange collapsed – stoking fears about bitcoin’s risks

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Turkey’s government is planning to crack down on cryptocurrencies.

  • A second cryptocurrency exchange has collapsed in Turkey, adding to the country’s crypto woes.
  • Analysts said the abrupt closure of the exchanges highlighted the risks of cryptocurrencies.
  • Many have turned to bitcoin and other assets to try to hedge against the country’s high inflationn rate.
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The cryptocurrency market has been dealt a major blow in Turkey after a second exchange went down on Friday. The closures have left hundreds of thousands of people without access to bitcoin and other assets, which many had bought as a hedge against rampant inflation.

Analysts said the events were a reminder to cryptocurrency investors everywhere to be sure to do business with reputable companies.

Vebitcoin, a Turkish crypto exchange which had around $60 million in daily trading volumes, announced it had stopped all of its activities on Friday. It put a message up on its website blaming financial strains.

The Turkish financial crimes watchdog then blocked all the exchange’s bank accounts in the country later that day, according to the state-run Anadolu news agency.

Vebitcoin’s announcement came days after rival Turkish crypto exchange Thodex stopped operations and its founder fled the country. The exchange had around 390,000 active users, according to reports.

The abrupt closure of the exchange was one catalyst for bitcoin’s dramatic fall below $50,000 from recent highs close to $65,000, analysts said.

“The collapse of two exchanges in Turkey sent a warning to many cryptocurrency traders who have gotten into crypto with unreputable companies,” Edward Moya, senior market analyst at Oanda, said.

Turkey’s cryptocurrency woes have been tied up with government efforts to crack down on the market.

Last week the country’s central bank backed a ban on crypto payments. It said using cryptocurrencies for payments could cause “non-recoverable losses” for the parties involved.

But many Turks have turned to cryptocurrencies as a hedge against inflation, which stood at 16.2% in March.

“People like the idea of cryptocurrencies because they’re unconstrained by the government,” Marshall Gittler, head of investment research at BDSwiss, said. “But that freedom comes with costs – it also means there’s no insurance and limited regulation.”

Philip Gradwell, chief economist at Chainalysis, said: “The troubles at Turkish exchanges illustrate the importance of clear and stable regulation for cryptocurrency.”

He added: “Investors in the USA and Europe are fortunate to have reputable cryptocurrency exchanges that operate within a strong regulatory framework, so the events in Turkey should not reduce their confidence.”

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The Coinbase IPO is a watershed moment for the industry that will suck in big-name investors, says Crypto.com CEO

Coinbase went public on the Nasdaq on Wednesday.

  • The Coinbase IPO is a watershed moment for the industry, the boss of the Crypto.com exchange said.
  • Kris Marszalek said it “immediately reprices all the companies and all the deals in this space.”
  • Yet he said exchanges need to diversify to become less dependent on volatile trading revenue.
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Coinbase’s $100 billion stock market debut is a watershed moment for the cryptocurrency industry that will fuel a boom in investment, crypto exchange chief executive Kris Marszalek has said.

The head of the Crypto.com exchange told Insider that the direct listing “immediately reprices all the companies and all the deals in this space.” He added that it was “extremely positive news for the whole industry.”

Yet, Marszalek said Coinbase still faced some challenges, the main being the volatility of bitcoin and other cryptocurrencies and their resulting trading revenues. Exchanges need to add new lines of business to tackle this problem, he said.

Coinbase, the US’s biggest cryptocurrency exchange, listed directly onto the Nasdaq exchange on Wednesday. Its valuation at one point shot above $100 billion but it closed at around $65 billion.

Crypto-enthusiasts and traditional investors alike were captivated. Many commentators hailed the listing as a coming-of-age moment for cryptocurrencies.

Edward Moya, senior market analyst at Oanda, said on Wednesday: “Bitcoin has survived years of skepticism and today’s Coinbase debut is an exclamation point that cryptocurrencies are here to stay.”

Marszalek’s Crypto.com exchange is a smaller but sizable rival to Coinbase, with just over 10 million users compared to Coinbase’s 56 million. He said the listing was a huge boost to the industry in general, in part because of the buzz it generated.

“It was so broadly covered… it was unavoidable,” he said. “And this will result in further allocations to the space by institutions.”

Institutional interest has been a major driver of the soaring bitcoin price in 2021. Big-name banks JPMorgan, BNY Mellon and Morgan Stanley are getting involved. And firms are queueing up to launch the first US bitcoin ETF, should regulators allow them.

Coinbase, ticker COIN, is now one more way for people to get exposure to bitcoin and crypto, Marszalek said. “I expect a little bit of a cool-down after such a seminal event, but it’s not going to [last] long.”

But the Crypto.com boss said the most positive effects would come from the spotlight the IPO shined on the industry.

“It attracted a lot of attention and what it does is it immediately reprices all the companies and all the deals in this space, regardless of the [fundraising] stage [they’re at]. All these deals are suddenly repriced in this new reality.

“Fundamentally, it will result in more capital flowing into crypto companies. And that means more resources at their disposal to hire more engineering talent, bring in more people, innovate more, just basically drive this industry forward.”

Yet, Marszalek said the volatility of cryptocurrencies is a problem for exchanges, and is something Coinbase needs to address.

With 96% of Coinbase’s revenue coming from transaction fees on trading, the danger is that a sharp fall in bitcoin and other currencies could badly hurt the company’s quarterly results.

Coinbase is well aware of this, with CEO Brian Armstrong saying on Wednesday that the company will diversify away from transaction fees over the next 5 to 10 years, by developing products like crypto cards.

Marszalek, whose company has a Visa crypto card and recently launched a NFT marketplace, said: “The question is who is going to be able to build a robust business that doesn’t just stand on one leg.”

He added: “We will see who manages to do it over the next couple of years, it’s going to be a fun thing to watch.”

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Coinbase’s $100 billion valuation should be about 80% lower, New Constructs CEO says

coinbase mobile phone app
Coinbase is the largest cryptocurrency exchange in the US.

  • New Constructs CEO David Trainer said his calculations point to a valuation of $18.9 billion for Coinbase, well below the estimated $100 billion.
  • Coinbase is set for a direct listing on the Nasdaq on April 14.
  • Coinbase faces the risk of competitors driving down their fees in the young cryptocurrency market.
  • See more stories on Insider’s business page.

The potential $100 billion valuation of Coinbase Global ahead of the cryptocurrency exchange’s trading debut is “ridiculously high,” said New Constructs CEO David Trainer, with an outline from the veteran stock analyst including his view that the company’s profitability faces the risk of being slashed.

Coinbase is set for a direct listing on the Nasdaq exchange on April 14. This week, the San Francisco-based company estimated a more than 800% jump in first-quarter revenue to $1.8 billion from a year earlier but noted that it is “very difficult to accurately forecast” revenue going forward because of market volatility.

“Even though Coinbase’s revenue surged over the past 12 months, the company has little-to-no chance of meeting the future profit expectations that are baked into its ridiculously high expected valuation of $100 billion,” said Trainer in a research note from New Constructs released Friday.

Coinbase is currently the largest cryptocurrency exchange in the US by revenue, and its platform offers access to Bitcoin, Ethereum, and Litecoin, among other digital currencies.

Coinbase is a standout among companies with recent IPOs because it makes a profit, said Trainer, with core earnings rising to $317 million from about $17 million in 2020 year-over-year.

But overall, Trainer said his “calculations suggest Coinbase’s valuation should be closer to $18.9 billion — an 81% decrease from the $100 billion expected valuation.”

Among Coinbase’s risks is competition as the cryptocurrency market matures, and that could lead to transaction margins at the company to fall “precipitously.”

He pointed to sharp competition in late 2019 between brokerages over stock-trading fees and said such a “race-to-the-bottom phenomenon” is likely to emerge among cryptocurrency exchanges.

“Competitors such as Gemini, Bitstamp, Kraken, Binance, and others will likely offer lower or zero trading fees as a strategy to take market share,” he said. Also, if traditional brokerages begin offering customers the ability to trade cryptocurrencies, that would “most certainly cut down on the unnaturally wide spreads in the immature cryptocurrency market.”

He said, for example, if Coinbase’s revenue share of trading volume fell to 0.01%, which is equal to traditional stock exchanges, its estimated transaction revenue in the first quarter of 2021 would have been just $35 million, instead of the estimated $1.5 billion.

“The crypto markets are very young and we expect many more companies to compete for the profits Coinbase enjoys today,” Trainer said.

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Coinbase’s expected $100 billion valuation is ‘far too high’ given the increasing competition in the cryptocurrency market, a veteran stock analyst says

coinbase mobile phone app
In this photo illustration, Bitcoin course’s graph is seen on the Coinbase cryptocurrency exchange application on February 12, 2018 in Paris, France. Founded in June of 2012, Coinbase is a digital currency wallet and platform where merchants and consumers can transact with new digital currencies like bitcoin, ethereum, and litecoin. The company is based in San Francisco, California generated in 2017 a record turnover of one billion dollars (about 810 million euros) with exceptional trading volumes, which made it the most downloaded mobile app on iOS last December.

  • Coinbase’s rumored $100 billion valuation is “far too high,” said New Constructs CEO David Trainer.
  • The cryptocurrency exchange is set to go public via direct listing in the near future.
  • Trainer said increasing competition in the crypto exchange market will weigh on Coinbase’s lofty valuation.
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Coinbase could go public via a direct listing as early as March, but New Constructs CEO David Trainer says investors should not buy the stock if the valuation is anywhere close to current expectations.

The cryptocurrency exchange platform has a rumored valuation of roughly $100 billion, which is “far too high” given the increasing competition in the market, Trainer said in a recent note.

Although the company achieved profitability in 2020, the current expected valuation implies that Coinbase will become the largest exchange in the world by revenue, which isn’t guaranteed given the existence of competitors like Gemini, Kraken, and Binance, he added.

In 2020, transaction revenue represented over 96% of Coinbase’s net revenue, according to Coinbase filings. Trainer points out that the exchange’s transaction revenue as a percent of trading volume is 57 times higher than the Intercontinental Exchange, which runs the New York Stock Exchange.

Competitors will likely emulate Coinbase’s high margins, and the exchange’s “competitive position will inevitably deteriorate,” Trainer said.

“…if stock trading fees are any indicator for crypto trading fees, we should expect them to quickly go lower if not to zero,” said the research analyst. “Competitors such as Gemini, Bitstamp, Kraken, Binance, and others will likely offer lower or zero trading fees as a strategy to take market share, which would start the same “race to the bottom” that we saw with stock trading fees in late 2019.”

“The likelihood of Coinbase maintaining such high fees is very low in a mature market,” he added.

With an expected valuation of $100 billion, Coinbase would earn a “neutral” rating from New Constructs.

Last week, D.A. Davidson initiated coverage of Coinbase with a “buy” rating and price target of $195. However, the analysts said it’s too early to tell if Coinbase will become the “Amazon of crypto” or the failing Netscape.

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