Cryptocurrency backers have spent years insisting that bitcoin, ethereum and other digital coins could revolutionize the world of finance. Finally, they’re getting their moment.
What’s happening: The Wall Street debut of cryptocurrency exchange Coinbase on Wednesday was a massive success, with the company’s valuation at one point topping $100 billion. Shares finished the trading session at $328.28 apiece, lending the company a market value of nearly $86 billion.
New York Stock Exchange owner Intercontinental Exchange is valued at $67 billion, while the group that owns the London Stock Exchange is worth $59 billion.
Coinbase shares are up another 8% in premarket trading Thursday.
Why it matters: The company’s direct listing was billed as the crypto event of the year — and the groundswell of investor interest is hugely validating for both the crypto economy and the companies that have cropped up to support it.
Cryptocurrencies like bitcoin have skyrocketed in value this year as they’ve gained more mainstream acceptance. Tesla has started accepting bitcoin payments for its cars and now holds some of the digital currency on its balance sheet. Payment processors like PayPal, Mastercard and Visa are trying to normalize crypto payments on their networks, while old-school banks like BNY Mellon are taking steps so clients can hold crypto assets.
But the Coinbase listing was a seminal event that tested the appetite of a broad range of investors. And clearly, there’s hunger for exposure.
“The Coinbase debut is a really important event in the maturation of the crypto industry. It has built a strong business and the market is believing that,” Steve Ehrlich, CEO of Voyager Digital, a crypto asset broker, told my CNN Business colleague Paul R. La Monica. “This is just the beginning.”
The debut has made a lot of people very rich. At Wednesday’s closing price, Coinbase CEO Brian Armstrong’s 39.6 million shares are worth just under $13 billion.
Garry Tan, managing partner with Initialized Capital, invested in the company when it was founded in 2012. He told CNN Business that his firm’s first investment — about $300,000 at the time — is now worth more than $2 billion. That’s a more than 6,000% return.
What’s next: Markets are already buzzing about the debut of additional crypto stocks like Coinbase rival Kraken. But the nascent industry also faces a lot of uncertainty, with fierce competition and the looming threat of fresh regulation.
Top US banks just notched a blockbuster quarter
An improving economy, a full pipeline of deals and choppy markets? That’s the perfect recipe for big banks, which are posting eye-popping results for the first three months of the year.
Check it out: JPMorgan Chase reported $14.3 billion in profit on Wednesday, boosted by the release of $5.2 billion in credit reserves it had set aside in case the pandemic worsened.
CEO Jamie Dimon pointed to the “rapidly improving economy” as a major contributor. Defaults on loans are becoming less of a concern, while Americans are taking advantage of low interest rates as they race to secure mortgages for new homes.
Investment bankers have also been incredibly busy thanks to a flood of mergers and stock and bond sales, lining up a record quarter for fees.
“Clients remained very active in raising capital, particularly in the equity markets. And we witnessed high levels of M&A activity,” Goldman Sachs Chief Financial Officer Stephen Scherr told analysts Wednesday, adding that the number of deals waiting to be executed “ended the quarter at record levels.”
Wall Street traders also thrived in a frenzied environment. (Remember GameStop mania? Yes, that was last quarter.) Goldman Sachs’ trading revenue rose 47% to $7.6 billion during the first three months of the year, its highest level since 2010.
Investor insight: Goldman’s shares jumped more than 2% after it reported results, while JPMorgan Chase’s stock dropped almost 2%. So far this year, shares are up 27% and 19%, respectively.
Watch this space: Bank of America and Citi are up next, followed by Morgan Stanley on Friday.
Did China’s economy expand a record 19% last quarter?
All signs indicate that China’s economy is on fire. But the size of the blaze deserves attention.
The latest: A Reuters poll found that the country’s economic output likely grew at a record pace of 19% in the first three months a year, a dramatic rebound from the pandemic slump China endured at the beginning of 2020.
The reading is skewed given that activity plummeted a year earlier. But the estimate, which is based on the median forecasts of 47 economists, bolsters the view that China will run much hotter this year than the conservative government forecast of more than 6% growth.
See here: The International Monetary Fund expects China, which was the only major economy to avoid recession last year, to grow 8.4% in 2021.
Recent economic data has supported an optimistic view. Trade is booming, with imports surging more than 38% last month in US dollar terms compared to a year earlier. Exports grew by nearly 31% in March versus a year prior.
Why it matters: China and the United States are the twin engines expected to power the global recovery. That means investors, economists and policymakers will be watching first quarter GDP data very closely when it’s released on Friday.
Bank of America, BlackRock, Charles Schwab, Citigroup, Delta Air Lines, PepsiCo, Rite Aid, Truist, US Bancorp and UnitedHealth report results before US markets open. Alcoa follows after the close.
Also today: US retail sales for March arrive at 8:30 a.m. ET, along with last week’s initial unemployment claims.
Coming tomorrow: Morgan Stanley, BNY Mellon and PNC close out a busy earnings week.