The largest U.S. exchange announced plans to invest $500 million in various digital assets. Experts told on what principle the company will choose cryptocurrency for investment, and how it may affect the market.
On August 20, cryptocurrency exchange Coinbase announced that it will buy $500 million worth of cryptocurrency, and will invest 10% of profits in digital assets. It is known that in addition to bitcoin and Ethereum, the company will own assets on the Proof of Stake protocol, as well as DeFi tokens and other altcoins available on Coinbase.
It is known that the distribution of the company’s investments in cryptocurrencies will be determined by its aggregate custodial balances. Thus, Coinbase’s investment strategy will depend on its customers. The exchange has warned that it will only sell cryptoassets under certain circumstances, such as due to their delisting from the trading platform.
The news that Coinbase is planning to buy cryptocurrencies as part of its updated investment strategy is positive, but one should not overestimate its importance, says Victor Pershikov, lead analyst at 8848 Invest. In his opinion, it would be strange if a public cryptocurrency exchange did not consider CFA as an investment asset. Pershikov called the decision partly an image decision for Coinbase.
The analyst is confident that Coinbase’s investments will primarily focus on bitcoin, Ethereum, Cardano, Chainlink and other DeFi assets. Regulatory toxic anonymous coins such as Zcash and Dash are unlikely to be represented in the exchange’s portfolio, the expert said.
“Most likely, Coinbase will prefer to invest in the most capitalized tokens and cryptocurrencies of the CFA market, as part of a kind of “comfort” strategy, without risky investments in low-capitalized assets. “Right now, the main goal for Coinbase is not to earn ‘X’s’ from investing in the CFA market, but not to scare away investors who buy shares of the exchange, so I would not be surprised if their portfolio does not show a significant ‘alpha‘” – Pershikov said.
About the possible interest of Coinbase to cryptocurrencies on the Ethereum blockchain and Cardano altcoin also reported the head of CEX.IO Broker Data Analysis Department Yuri Mazur. At the same time, according to the expert, it is unlikely that already known cryptoprojects will react with strong dynamics to such messages. Still, this is more of a narrow industry news, rather than an opportunity to scale digital assets to new large businesses, Mazur emphasized.
Artem Deyev, head of analytical department of A-Markets, is also sure that Cardano will get into the crypto-exchange portfolio. However, in his opinion, a sharp increase in quotations on this news should not be expected – the fundamental background is still quite complicated for all currencies, which overlaps small positive news. The expert believes that quotes may burst up but then they will most probably fall back to their previous levels.
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