(Bloomberg) —
Coinbase Global Inc. shares rose premarket on the second day of trading as momemtum builds around the biggest U.S. cryptocurrency exchange and one analyst said its upside potential “could be immense.”
The stock traded at $352 at 7:15 a.m. in New York, up about 7.5% from the last close, but still lower than Wednesday’s opening price. After debuting at $381 in its direct listing on Nasdaq Wednesday, Coinbase climbed as high as $429.54 — sending the exchange’s valuation soaring above $112 billion at one point before slipping back as Bitcoin fell from record highs.
Despite being unable to sustain its initial strength, positive sentiment toward the stock is starting to build. Cathie Wood’s Ark Investment Management bought about $246 million worth of the stock for three of its funds, while BTIG analyst Mark Palmer initiated coverage with a buy rating, setting a price target of $500 and touting the potential increase in cryptocurrency’s total market capitalization beyond the curent $2.1 trillion.
Coinbase’s listing is seen pushing crypto even more into the mainstream of investing, exposing legions of potential buyers to digital tokens, which have grown into a $2 trillion industry in little more than a decade. Bitcoin, the original and biggest crypto coin, is valued at more than $1 trillion alone after a more than 800% surge in the past year.
At the closing price, Coinbase’s valuation on a fully diluted basis was about $86 billion. Given its size and visibility, Coinbase is likely to be popular with actively managed equity funds, particularly growth managers, essentially making a large swath of stock holders passive investors in crypto.
Growing mainstream acceptance of cryptocurrencies has spurred Bitcoin to a 120% rally since December, as well as lifting other tokens to record highs. That’s despite lingering concerns over their volatility and usefulness as a method of payment. Attention from regulators is poised to intensify as Coinbase becomes a public company.
(Updates share prices, add details throughout)
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