Coinbase: how to buy and short Coinbase shares

How to trade Coinbase shares

Trading Coinbase shares with us means that you’ll be speculating on the company’s share price without owning the shares directly. Instead, you’ll be opening a position with spread bets or CFDs, which are leveraged derivatives.

• ‘Buying’ means that you’re taking a position on the Coinbase share price rising – known as going long
• ‘Selling’ means that you’re taking a position on the Coinbase share price falling – known as going short

Since spread bets and CFDs are leveraged, it’s important that you take steps to manage your risk because leverage can increase both your profits and your losses.

Learn more about the impact of leverage on your trading

How to invest in Coinbase shares

Investing in Coinbase shares is different to trading because when you invest, you’re taking direct ownership of shares rather than just speculating on their price. Investing in Coinbase shares means you’ll profit if you sell your shares for a better price than what you paid to buy them; you’ll incur a loss if you sell your shares for less than this price.

Leverage isn’t available for investments, so you’ll need to commit the full value of the position upfront. While this can increase your initial outlay, it also caps your risk. For example, if you invested £1000 in Coinbase shares, your maximum risk is set at £1000 – assuming that the share price falls all the way to £0.

With us, you can invest from zero commission on US shares and from £3 commission on UK shares. These rates are available to clients who opened three or more positions on their share dealing account in the previous month. Remember that investments can fall in value as well as rise, so you may receive back less than you initially invested.

Here’s how our share dealing commissions match up to our competitors:

Coinbase: our market analysis

Commentary by Joshua Mahony, IG Senior Market Analyst

The Coinbase IPO adds a fresh layer of legitimacy for the cryptocurrency sphere, with the valuation of $86 billion meaning that the company is valued above some historic UK-listed names such as BP, Shell, and Barclays.

While investors have been increasingly able to invest in crypto through miners such as Argo Blockchain, Riot Blockchain, and Marathon Digital, the sheer size of this Coinbase listing brings the kind of liquidity and size needed for funds to invest.

Crypto bulls have long looked towards key targets such as a Bitcoin ETF as a means to bring cryptocurrencies into the mainstream. But, the likely correlation between Coinbase and coin pricing will make this a great proxy for investors to gain exposure to the sector without the risks involved in storage.

The volatility seen in the first day of trading comes as no surprise, with many such lofty tech valuations often bringing significant uncertainty when the company first lists. Casting our minds back to the widely anticipated Facebook IPO in 2012, an initial collapse from $38 to $17 brought plenty of calls that the IPO had been overvalued.

However, much like other tech names before them, the initial volatility on entering the market does not necessarily signal that Coinbase is a bad investment per se. Undoubtedly, the Coinbase valuation will be intrinsically linked with the direction of crypto prices, which are notoriously volatile.

Coinbase shares: the basics

Coinbase shares are listed on the NASDAQ stock exchange. The company’s share price closed at $328.28 on its first day of listing, which gave it a market cap of almost $86 billion – making it one of the largest listings in history. Coinbase went public through a direct listing on 14 April 2021 rather than a traditional IPO.

Find out more about how IPOs work, or learn how to take a position on IPOs with us.

Coinbase: a brief history

Coinbase was founded in 2012 by Brian Armstrong – who serves as the current chief executive officer (CEO) – and Fred Ehrsam. The company is headquartered in San Francisco, and it acts as a cryptocurrency exchange and broker for bitcoin, bitcoin cash, ether, litecoin and others.

What is Coinbase’s business model?

Coinbase’s business model is based on its two core products. The first is an exchange for trading the aforementioned cryptocurrencies – known as a Global Digital Asset Exchange (GDAX). The second is a user-facing platform for trading bitcoin, bitcoin cash, ether, litecoin and others.

Coinbase offers accounts to potential clients for cryptocurrency trading. In total, the company offers over 25 cryptocurrencies to its users, some of which are niche opportunities referred to as ‘altcoins’ because they are not widely known in the cryptocurrency mainstream and don’t have the name recognition of bitcoin, ether or litecoin.

The company charges a commission fee for its users to use its platform and its users can trade with leverage. It has two accounts: regular and pro. The regular account charges higher commissions, while the company’s pro account has lower commission fees for users.

Coinbase share price: how to analyse Coinbase shares

You should use both technical analysis and fundamental analysis to analyse the Coinbase share price once the company goes public.

• Technical analysis is concerned with chart patterns, technical indicators and historical price action
• Fundamental analysis is based on the fundamentals of a company, including its net revenue or profit and loss statements

You should use a mix of both of these forms of analysis when assessing the Coinbase share price– especially since its share price could be volatile given the inherent instability in the cryptocurrency market.

Interested in analysis? Find out more at IG Academy