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Analyzing Coinbase’s Money Base As It Files A Secret S-1

Tuesday, December 22, 2020 • 4:00 PM EST

Coinbase decided to file a confidential S-1, hiding its financial performance from the markets ahead of selecting an IPO date. To better understand the business’ growth potential, Cardify analyzed spending data for the mega crypto exchange. Looking at deposits, withdrawals, user acquisition, and average deposit value, there’s a correlation to the price of Bitcoin. 

A confidential S-1 filing does not mean a company’s financials won’t be disclosed before going public. Instead, the mechanism - introduced in 2017 by the SEC - allows ‘emerging growth companies’ to have the SEC privately review its registration before commencing official IPO proceedings. The other benefit of filing a confidential S-1 is that the company can choose its IPO date, provided it publicly files all necessary documentation at least 15 days before a road show starts.

For Coinbase, a trend emerges when layering the price of Bitcoin and deposits into the platform. As the price of Bitcoin fluctuated up and down from January 2019 to December 2020, so too did deposits into Coinbase.

Customer acquisition has been volatile throughout 2020, with spikes that roughly correlate to increases in the price of Bitcoin and valleys that roughly correlate to drops in the price of Bitcoin.

Withdrawals are also fairly consistent with deposits, both correlating with Bitcoin price fluctuations. However, a notable difference between deposits and withdrawals is that withdrawal spikes are far more frequent and variable. In many cases - appearing almost on a monthly basis - there is a large spike in withdrawals.

Average deposit value is equally volatile, again correlating to the price of Bitcoin. This suggests that people not only join Coinbase’s platform more when the price of BTC is rising, but they also are more comfortable depositing larger amounts of money.

Coinbase filing a confidential S-1 with the SEC gives it the opportunity to choose its IPO date. With data suggesting that a lot of Coinbase’s growth metrics - user acquisition, average deposit value, and the general growth of deposits vs. withdrawals - are correlated to the price of BTC, this will be an interesting IPO to watch. While the platform also offers crypto trading for multiple other cryptocurrencies beyond Bitcoin, it seems that the mainstream market is still wooed by the original cryptocurrency.