The United States’ biggest crypto exchange would have made more money by simply buying and holding Bitcoin (BTC) in 2013. 

Data circulating on social media reveals that despite Coinbase’s $800-million profits in Q1, the company would still be richer had it used its seed funding cash to buy BTC.

Coinbase profits lose out to 2013 hodlers

Ahead of its initial public offering on April 14, Coinbase reported bumper revenue this week. At $1.8 billion, Q1 outperformed the entirety of 2020.

The numbers became an instant talking point as market participants weigh up the likely impact of the IPO launch. Other IPOs, including the recent Deliveroo sale, sparked sell-offs.

Amid sky-high valuations and the associated buzz, however, it appears that all Coinbase had to do in order to outperform was to buy Bitcoin.

Specifically, the exchange’s $30-million seed funding in 2013 would be worth up to $2 billion had it been converted to BTC at the time.

By contrast, Coinbase’s lifetime profits total to date are estimated to be somewhere between $780 million and $1.3 billion.

Chart

BTC/USD 1-month candle chart (Bitstamp). Source: Tradingview

“Coinbase is going to list publicly in less than 10 days and reported blowout numbers today (~800m in profit on 1.8B on revenue),” developer Vijay Boyapati commented.

“Sounds great, but imagine how much more they’d be worth if they had held their profits in #Bitcoin instead of dollars for the last 8 years.”

As Cointelegraph reported, Bitcoin’s compound annual growth rate has topped 200%, and since April 2013, BTC/USD is up over 43,000%.

Bitcoin supply shortage stays real

Boyapati was touching on another, more controversial aspect of Coinbase’s business model to come to light this year. For all its success, executives have always chosen to hold a fairly modest amount of BTC.

According to its recent filing with U.S. regulators, the exchange owns 4,486 BTC. By contrast, as Boyapati notes, newcomer MicroStrategy, despite not being an exchange, has bought in excess of 91,000 BTC since August last year — a stash that has doubled in U.S. dollar terms for the company to date. 

“It’s almost as if Coinbase doesn’t even believe in the industry in which they are one of the biggest players. Sad,” he added.

Not everyone was convinced. Erik Voorhees, founder of crypto exchange service ShapeShift, argued that Coinbase’s contribution to the cryptocurrency phenomenon made it incomparable to MicroStrategy.

“Imagine holding MicroStrategy in higher esteem than Coinbase. The latter struggled for eight years to build the most successful Bitcoin company in the world, serving 50 million people,” he responded to a tweet from Casa co-founder Jameson Lopp. 

“The former discovered Bitcoin in 2020 and bought a bunch... from Coinbase.”

Chart

Bitcoin exchange inflows vs. BTC/USD. Source: Ki Young Ju/ Twitter

Meanwhile, data on Wednesday showed a conspicuous spike in exchange outflows this week, a sign that long-term hodling and overall interest in buying Bitcoin is growing fast.

“Are we in the market cycle high? No,” Ki Young Ju, CEO of on-chain analytics service CryptoQuant, which published the data, commented, highlighting the difference between the current climate and traditional Bitcoin cycle tops.

“When the market reaches its peak, everyone deposits BTC to exchanges to sell.”

Coinbase Pro, the professional trading arm of Coinbase, saw 12,000 BTC leave in a single transaction.


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Recommended content


Recommended Content

Editors’ Picks

Is Altcoin Season here as Bitcoin reaches a new all-time high?

Is Altcoin Season here as Bitcoin reaches a new all-time high?

Bitcoin reaches a new all-time high of $98,384 on Thursday, with altcoins following the suit. Reports highlight that the recent surge in altcoins was fueled by the victory of crypto-friendly candidate Donal Trump in the US presidential election.

More Altcoin News
Shanghai court confirms legal recognition of crypto ownership

Shanghai court confirms legal recognition of crypto ownership

A Shanghai court has confirmed that owning digital assets, including Bitcoin, is legal under Chinese law. Judge Sun Jie of the Shanghai Songjiang People’s Court shared this opinion through the WeChat account of the Shanghai High People’s Court.

More Cryptocurrencies News
BTC hits an all-time high above $97,850, inches away from the $100K mark

BTC hits an all-time high above $97,850, inches away from the $100K mark

Bitcoin hit a new all-time high of $97,852 on Thursday, and the technical outlook suggests a possible continuation of the rally to $100,000. BTC futures have surged past the $100,000 price mark on Deribit, and Lookonchain data shows whales are accumulating.

More Bitcoin News
Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange

Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange

Shiba Inu trades slightly higher, around $0.000024, on Thursday after declining more than 5% the previous week. SHIB’s on-chain metrics project a bullish outlook as holders accumulate recent dips, and dormant wallets are on the move, all pointing to a recovery in the cards.

More Shiba Inu News
Bitcoin: New high of $100K or correction to $78K?

Bitcoin: New high of $100K or correction to $78K?

Bitcoin surged to a new all-time high of $93,265 in the first half of the week, followed by a slight decline in the latter half. Reports highlight that Bitcoin’s current level is still not overvalued and could target levels above $100,000 in the coming weeks.

Read full analysis
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

BTC

ETH

XRP