Why did Coinbase’s private-market valuation jump 13-fold in 2021?

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Coinbase's Private Market Valuation Surged Due to Cryptocurrency Market Momentum and Increased Profitability

Coinbase's private market valuation experienced a significant increase of nearly 13-fold in early 2021, reaching an average price of US$343.58 per share by March 15. This surge is closely linked to the concurrent rise in the value of Bitcoin and a demonstrated shift to profitability for Coinbase in the preceding year.
Valuation Growth Tied to Bitcoin's Ascent

The substantial appreciation in Coinbase's valuation directly mirrored the dramatic rise in the price of Bitcoin. In the first quarter of 2021, through March 15, private market transactions for Coinbase shares averaged US$343.58 each. This represents a dramatic increase from the US$28.83 per share recorded in the third quarter of 2020. The timing of this valuation rally aligns with Bitcoin hitting a record high of US$61,781.83 on a Saturday prior to the report.
Shift to Profitability Bolstered Investor Confidence

Coinbase's improved financial performance, specifically its swing to profitability in the previous year, further supported this valuation jump. A regulatory filing in the month prior to the announcement revealed that the company had achieved profitability, a development that occurred as Bitcoin's price surged. This demonstrated financial strength provided a solid foundation for the increased investor interest and the subsequent rise in share prices in the private market.
Historical Valuation and Market Positioning

This recent valuation marks a significant leap from Coinbase's last private fundraising round in October 2018, when it was valued at just over US$8 billion. The implied potential valuation of around US$68 billion ahead of its planned stock market listing places Coinbase in a competitive position relative to established financial infrastructure providers. Its valuation eclipses that of major exchange operators like the New York Stock Exchange parent ICE, Nasdaq Inc, and the London Stock Exchange, and is nearing that of the futures exchange operator CME Group.
Direct Listing and Regulatory Filing Context

Coinbase's move towards a public listing, initiated by a confidential submission of paperwork with US regulators in December for a direct listing, also signals growing confidence in its market readiness. The company has registered approximately 114.9 million shares for its upcoming listing. The private market transactions in the quarter leading up to March 15 saw share prices ranging from a low of US$200.00 to a high of US$375.01, underscoring the dynamic trading activity.

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Why did Coinbase’s private-market valuation jump 13-fold in 2021?

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