Macro investor and former Goldman Sachs manager Raoul Pal is raising concerns that Coinbase’s initial public offering (IPO) might have a negative impact on Bitcoin.
In a new tweet, the Bitcoin bull says the IPO of the US-based crypto exchange is going to divert institutional investments away from cryptocurrency markets.
“Does anyone have a handle on when Coinbase IPO is? It’s going to suck a lot of institutional liquidity out of the space as it’s an equity that is easy to buy and will likely cause a short term, significant top.”
Pal explains that institutional investors will likely choose to invest in a stock that offers exposure to cryptocurrencies rather than buy Bitcoin.
“Let’s say there is a $100 billion of institutional money ready to come into BTC in the next 6 months and XX billion retail. Crypto is impossible to buy for some and hard(ish) for others. Then imagine an equity is launched that is worth $60 billion on the grey market. If you are a fund manager, then why not just own Coinbase to get exposure? Easy. No, it ain’t bitcoin, but it will move sort of like it and you don’t have to beg your investment committee or trustees.”
As for retail investors, the macro guru highlights that they can easily buy Coinbase’s stock through a broker instead of going through the hassle of owning and storing Bitcoin.
“Retail – well, they can now just buy on Schwab in 3 seconds. BTC exposure without the pain of new accounts, fear over hacks and all the other FUD. So, rational choice – buy Coinbase, regardless of whether good or bad as a company… It’s BTC for dummies.”
Pal highlights that the rerouting of billions of dollars worth of investments could be the catalyst that starts a BTC correction.
“Sadly, it soaks up $60 billion of demand (or more) for BTC… That absorbs a lot of future demand. Maybe a few months’ worth and the institutional buying slows down…”
However, Pal says the correction will help keep the current bull market sustainable.
“All perfectly normal and reasonable… Then it goes to the moon. See 2013 for details.”
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