After the approval of the Bitcoin spot ETF listing by the U.S. Securities and Exchange Commission (SEC) in January, the cryptocurrency market has been soaring. The market value of the U.S. listed cryptocurrency exchange Coinbase has also risen accordingly. The market value of Coinbase surpassed $50 billion earlier this week, making it the fourth largest listed exchange in the world, surpassing the Hong Kong Stock Exchange.
Bitcoin has been continuously rising recently, reaching $64,000 this morning, reaching a new high since November 2022. The high trading volume caused Coinbase to crash this morning, with some users unable to access the platform and even experiencing zero account balances.
Despite some users complaining in the community, Coinbase is still one of the big winners in this wave of market surge. Its stock price has risen by 28% this year and a staggering 210% in the past year, bringing its market value to $48.649 billion, surpassing the Hong Kong Stock Exchange and becoming the fourth largest listed exchange in the world.
According to a report by Hong Kong’s Ming Pao, the Hong Kong Stock Exchange ranked first in terms of market value among global listed exchanges for most of the period between 2005 and 2008. Even at the end of 2022, it still had a market value of about HK$427.5 billion (approximately $55.58 billion), leading the London Stock Exchange and ranking third globally. However, with the weakness of the Hong Kong stock market, its stock price and market value have continued to decline. As of the end of December last year, the market value of the Hong Kong Stock Exchange had fallen to approximately HK$339.8 billion (approximately $43.65 billion), falling behind the London Stock Exchange and ranking fourth globally, and now it has been surpassed by Coinbase.
The Hong Kong Stock Exchange closed at HK$244.20 today, with a current market value of HK$309.6 billion (approximately $40.25 billion). Compared to the market value of $55.58 billion at the end of December 2022, it has fallen by more than 27% over the past year. Compared to the record high stock price of HK$567 in February 2021, it has fallen by more than 50%.
Bloomberg data shows that as of December last year, the Hong Kong Stock Exchange’s estimated price-to-earnings ratio was 26.94, still higher than most global exchanges. Among the major listed exchanges, Coinbase has the highest estimated price-to-earnings ratio of 124.
Wen Jie, head of the Asia investment strategy department at KGI Securities, analyzed that the introduction of the Bitcoin spot ETF in the United States has attracted retail investors and brought in new funds, which has led to a sharp increase in the market value of related cryptocurrency exchanges. The performance of the Hong Kong stock market has been worse than other markets in recent years, and the trading volume of Hong Kong stocks has been lower than before, directly affecting the Hong Kong Stock Exchange, which relies on market turnover for 70% of its revenue, resulting in decreased profitability and valuation, and a simultaneous decline in market value.
In contrast, benefiting from the recovery of the cryptocurrency market, Coinbase’s trading revenue in the fourth quarter of last year increased by 64% to $529.3 million, and it turned a profit for the first time since 2021, with a net profit of $273.4 million. The company’s revenue is expected to further grow in the first quarter of this year.
Coinbase CEO Brian Armstrong stated last week that the Bitcoin spot ETF has released new funds into the cryptocurrency field. Coinbase has witnessed tremendous demand, and now every institution is starting to hold cryptocurrencies, which have become an indispensable part of every diversified investment portfolio.