That’s how bestselling author Malcolm Gladwell describes the point at which an idea or trend goes from fringe to mainstream.
Gladwell wrote a book about it in 2000 called The Tipping Point. As he explains it…
The tipping point is that magic moment when an idea, trend, or social behavior crosses a threshold, tips, and spreads like wildfire.
As I (Chris Lowe) will show you in today’s dispatch, that’s the moment crypto is approaching right now.
Most folks still don’t know it. But as colleague and crypto investing expert Teeka Tiwari has been showing his readers, this week will go down in history as the moment crypto went mainstream.
So if you still have no exposure to the crypto megatrend, despite our repeated attempts to get you to invest, pay close attention…
As you’ll see today, a first-of-its-kind event will take place on Wednesday.
And it will bring the next wave of investors into crypto… and send crypto prices rocketing even higher.
It’s the leading cryptocurrency exchange in the U.S. Think of it as a broker for bitcoin (BTC) and other cryptos.
On Wednesday, it will have its IPO (initial public offering). This is when a company lists its shares on a public stock exchange for the first time.
Coinbase will list on the Nasdaq using the ticker COIN. And it’s set to make a splash…
The company reported $1.8 billion in revenue in the first three months of this year. That’s a 38% jump over its $1.3 billion revenue for ALL of 2020.
Meanwhile, the exchange has more than 56 million verified users. That’s almost twice the number of accounts Schwab (SCHW) has.
And Coinbase is in hypergrowth mode…
The number of accounts has shot up 30% over the last three months. If it keeps up that pace… it will hit 100 million customers by October.
The total value of all tradeable cryptos – the crypto “market cap” – is $2 trillion.
That’s not as large as the $11 trillion global gold market. And it’s nowhere near as much as the $97 trillion global stock market. But it’s no minnow, either.
At a $2 trillion market cap, crypto is now worth almost as much as Apple (AAPL).
And it’s roughly four times the value of America’s largest bank, JPMorgan Chase (JPM).
As the crypto market cap continues to grow, so will Coinbase’s revenues, provided it can hold on to market share.
Investors believe it can. Coinbase is set to become more valuable than Goldman Sachs (GS) when it goes public.
Goldman Sachs was founded in 1869. It sees itself as an elite institution.
Yet here’s a company that was founded in 2012… doing business in a market financial elites trash-talked for years… that’s leapfrogged Goldman in value.
But Goldman and other investment banks also see the billions in fee-based revenues Coinbase is generating. They see the triple-digit annual growth in the size of the crypto market. And they want a slice of the pie.
It’s something Teeka has been hammering on for years.
In 2019, he began showing his readers how Wall Street bigwigs’ greed for fees would compel them to get into crypto. And he urged readers to buy into leading cryptos to get ahead of this trend. (Since then, some of his recommendations are up as much as 447%… 1,294%… even 3,636%.)
As he explained it…
Fees are the lifeblood of Wall Street. Financial firms rake in about $439 billion a year from fund management fees alone. This is Wall Street’s gravy train. These firms make it simpler for millions of people to buy financial products. Then they charge billions of dollars in fees for making them available.
But this gravy is drying up. Over the last decade, Wall Street profits from managed funds and security products have fallen by about one-quarter. So they’ll soon turn to crypto financial products as a new revenue source.
We’re already seeing this.
In October 2020, it started offering bitcoin trading on its platform.
But it’s charging customers 6% – including a type of hidden fee called a “spread” – for every round-trip trade. Teeka again…
This is an insanely high fee to pay to trade an asset. Most stockbrokers now have fees that are either zero or close to zero. A firm charging 6% round-trip commissions on stocks would face regulatory scrutiny and customer rebellion.
But firms can charge above-average fees on crypto-related business because this is a new asset class. And it’s so profitable folks are willing to take an extra hit on fees. You can see why Wall Street is licking its chops for a cut of the growing crypto-fee pie.
That’s why folks who worry the government will ban bitcoin should sleep easy.
Bitcoin and other cryptos are being woven into the fabric of the U.S. financial system.
There are now publicly listed companies that “mine” for cryptos. There are also publicly listed company’s such as MicroStrategy (MSTR) and Tesla (TSLA) that have plugged parts of their balance sheets into bitcoin.
Now, there will be publicly listed companies like Coinbase that facilitate crypto trading.
There’s too much money at stake for the government to try to shut it all down.
Even if members of Congress wanted to pass laws that interfered with this profit machine… their paymasters on Wall Street wouldn’t allow it.
Meanwhile, new crypto industry pressure groups are forming.
Last week, news broke that a group of companies – including Fidelity (FNF), Coinbase, and payment processor Square (SQ) – have formed an alliance to lobby lawmakers.
It’s called the Crypto Council for Innovation. According to its mission statement, it aims to show the “transformational promise of crypto and communicate its benefits to policymakers, regulators, and people around the globe.”
A lot of folks see the quadruple- and quintuple-digit gains some have already made on crypto. They think, “There’s no way I’m investing now. This trend must be running out of steam.”
But that’s like saying internet stocks had run out of steam in 1997, when Amazon.com (AMZN) went public.
Folks who bought AMZN shares at the IPO… and held for the long term… are up 224,129%. That’s enough to turn every $1,000 into $2.2 million. A $5,000 investment could have set you up for life.
Here’s Teeka with more on the opportunity ahead in the crypto space…
Right now, about 35 to 50 million Americans own crypto. That’s 10-15% of the U.S. population. The U.S. banking system touches the lives of more than 300 million Americans. It holds north of $20 trillion in assets. And that’s just a fraction of the $290 trillion global financial market.
Friends, as more people, businesses, and institutions warm up to crypto… we’ll see billions – even trillions – of dollars flow into crypto assets.
If you’re looking to invest in crypto, don’t wait for Wall Street. By the time it’s moved its clients into the sector, the biggest gains will be in the rearview mirror.
Instead, focus on investing small sums – about $200 to $1,000 – directly into cryptos before mass adoption. Bitcoin and ether [ETH] are two great choices if you are just starting out.
If you haven’t already, now is a great time to set up a Coinbase account and make your first small crypto purchase.
Crypto is becoming part of the mainstream financial sector before our eyes.
Wednesday’s IPO will not just put crypto on the radars of millions more investors. It will also open the gate for other crypto exchanges and businesses to list on the stock market and go mainstream.
If you don’t know where to start with crypto investing, check out our free special report on how to buy your first bitcoin here.
Teeka says Coinbase will boom as speculators pour in.
But he says Coinbase is a trade, not a long-term holding.
He recommends holding some COIN shares through 2021, then exiting.
Long term, he believes an entirely different kind of crypto exchange will be the ultimate winner.
More on that in these pages later this week…
Regards,
Chris Lowe
April 12, 2021
Barcelona, Spain