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Coinbase (NASDAQ: COIN), which helps individuals buy bitcoin on an exchange instead of mining it, has exited the IPO phase and should be a contender for investor portfolios.
Think you might want to diversify your portfolio with help from a big player in the cryptocurrency world? Our guide to Coinbase stock will help you invest in this firm and enter a peripheral segment of the crypto market.
Coinbase Financial History
Coinbase has a history of volatile expectations from investors, which made it more challenging to effectively evaluate the company before its IPO.
Coinbase chose a direct listing, meaning it passed up the traditional process of allowing investment banks to investigate the company and assign an opening value for the stock’s IPO. Coinbase had a formal valuation in 2018 when the company accepted $300 million in new financing. At that time, the company was estimated to be worth about $8 billion.
However, this valuation didn’t take into account the massive success that major cryptocurrencies like Bitcoin and Ethereum have seen since. Bitcoin alone increased in value from about $4,000 per coin in early 2019 to over $57,000 per coin in April 2021.
Based on the price of shares that changed hands on the NASDAQ Private Market, experts estimate the company might have been worth nearly $90 billion during price discovery between inside investors. At press time, Coinbase was trading around $245, having peaked around $260 earlier in the week, surpassing its opening price.
Coinbase Potential
As one of the United States’ most popular cryptocurrency exchanges, investors have high hopes for Coinbase. Founded in 2012, Coinbase has maintained its stronghold on the crypto market, continuing to reign as the largest exchange in the United States when measured in terms of users and total market capitalization.
Many cryptocurrency investors maintain that Coinbase stock will add a new layer of legitimacy to the market and set the tone for future crypto brokers to go public. Investors hope that by complying with traditional financial regulations, cryptocurrency brokers like Coinbase will confer more public trust in the market, which has long been panned by investing experts and regulators thanks to its decentralized nature.
Bitcoin’s pop in value isn’t only beneficial for Coinbase as a company. As more coverage of the cryptocurrency market makes its way into the mainstream, competitors like Robinhood, Kraken, PayPal and additional brokers also allow their users to buy and sell major cryptocurrencies with lower fees and sometimes no commission.
However, most competitors in the cryptocurrency sphere cannot match the services that Coinbase offers, including margin trading and a more advanced Coinbase Pro platform for experienced or particularly active investors. Coinbase also offers a wider selection of cryptocurrencies when compared with some competitors that offer access to both the stock and crypto markets.
How to Buy Coinbase (COIN) Stock
Coinbase trades on the NASDAQ, offering easy access for retail investors who want to diversify their portfolios or test a new and exciting stock.
If you’re familiar with how to buy stocks, you can use your current brokerage account to invest in Coinbase stock. If not, use these steps to get started.
- Pick a brokerage.
A broker is a financial service company that offers retail investors a trading platform that they can use to buy and sell shares of stock online. Before you can buy or sell stock, you must choose a broker and open your brokerage account.
Some of the factors you might want to consider when you choose the best broker for your needs may include:
• Commissions and fees: Though many brokers now offer commission-free trading, you shouldn’t assume that your broker will allow you to buy and sell stocks with no fees. Be sure to know and understand your broker’s fees before you open an account.
• Trading platform: Some brokers offer simple and streamlined trading platforms aimed at investors who have never bought or sold shares of stock before. Other brokers focus on offering a wide range of educational resources and analysis tools that you can use to enhance your investing experience. You may want to watch a few video demonstrations before selecting a broker to be sure that you’re opening an account with a platform you’ll be able to use effectively.
• Access to additional markets: If you’re only interested in buying Coinbase stock once it is publicly listed, you can invest effectively using any brokerage platform that offers NASDAQ access. However, if you want to invest in additional securities like options contracts, cryptocurrencies, futures contracts and precious metals, choose a broker that offers a single platform for all of your interests. - Decide how many shares you want.
After you’ve opened your brokerage account, keep track of how the share price of Coinbase moves. You can track and view COIN here or check the IPO calendar here if you bought into Coinbase early and wish to try other IPOs.
Decide how many shares you want to purchase based on the total amount of money that you can afford to invest. As is the case with any stock, never invest more money than you can afford to lose, as stock prices can dip suddenly and without warning. - Choose your order type.
After deciding how many shares of stock you want to buy, one of the final steps you should take is deciding which type of order you wish to place. The order type dictates how much money you’ll pay for each share of Coinbase stock you buy, when your order is executed and more.
Some of the most common types of stock orders you’ll see may include:
• Market orders: A market order tells your broker that you’d like to execute your stock order at the current market rate. For example, if shares of Coinbase stock currently trade at $200 a share and you place an order to buy 10 shares of stock at the current market rate, you’ll likely pay around $200 per share of stock you buy.
• Limit orders: A limit order tells your broker that you want to buy a select number of shares of stock at or below a specified price. When you place a limit order, you’ll specify a maximum price that you want to pay for each share of stock you buy, in addition to the number of shares you want to purchase. For example, you might place a limit order with a limit price of $200 per share of Coinbase stock. If your broker executes your order at or below a price of $200 per share, your broker will carry out the order. If the price of Coinbase stock doesn’t fall to $200 or lower throughout the trading day, your broker will not fill the order.
The broker you choose will dictate which types of orders you can place and how much (if any) commission you’ll pay per order. - Execute your trade.
After you have chosen an order type and decided how many shares of stock you want to buy, double-check your order details before submitting the order. After you submit your order, your broker will take care of executing the order according to your specific instructions.
If your broker cannot fill your order (for example, because the limit price isn’t reached during the trading day), it may leave it open indefinitely or cancel the order at the end of the day according to your preferences.
Best Online Stockbrokers
Not sure how to begin comparing brokers? Consider a few of our top choices below to make the search a little simpler.
Will you Invest in Coinbase Stock?
Coinbase going public was big news for crypto investors. The firm has the largest crypto exchange in the U.S., making crypto investment easier for the masses. Knowing how to tap into Coinbase's value could help you get the results you want for your portfolio while tapping into a new market you may not have tried.
Frequently Asked Questions
What is Coinbase?
Coinbase is a platform to securely store, transfer or exchange digital currency such as Ethereum and Bitcoin.
Is Coinbase safe?
Coinbase is a digital currency broker and exchange. It holds $20 billion in assets with 13.3 million users. According to their website, Coinbase maintains 98% or more of customer’s digital assets in cold storage, meaning only 2% or less could ever be vulnerable to an internet hack.
About Sarah Horvath
Sarah is an expert in the insurance, investing for retirement and cryptocurrency space.