Jeff Dorman
speaker
22 appearances
1 recordings
1 series
first heard Oct 2023
last heard Oct 2023
Jeff Dorman’s voice in public audio — every appearance, attributed to the second.
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So essentially what you're asking about is betas, right?
Meaning, can you predict in any meaningfully statistical way, what is the relationship to Coinbase stock relative to the price of Bitcoin or Ethereum or other tokens, right?
Is this a barometer?
You know, a good way to think about it is, you know, you look at how gold miners trade relative to gold, right?
Usually gold miners have a pretty high beta to gold and you can, you know, model out, well, if gold price goes, you know, X percent higher, then we expect a significantly higher increase in the price of the gold miners.
Coinbase, as well as MicroStrategy and some other, you know, quote unquote crypto stocks generally have about a 1.3 beta to the price of Bitcoin.
That means in essence, for every 1% move in Bitcoin's price, you'd expect a 1.3% move in Coinbase's price.
Over time, Coinbase's beta will probably decrease relative to Bitcoin, again, because they have all these other business lines that are starting to produce revenue that are not as directly related to Bitcoin.
And as a result, by that very nature, Coinbase's business lines and revenue streams are just less dependent on the price of Bitcoin than they used to be.
They still are a little bit dependent for sure, but it's going to smooth out over time.
Oh, it definitely has.
We were on record in early 2023 that we thought the crypto markets had bottomed.
But we had no idea what would actually take it higher because there was such a negative sentiment and very little reason for investors to put more money in.
We thought the events of 2022, which had a lot of negativity around all these bankruptcies and fraud and hacks and things like that, would certainly –
a lot of investors away from the digital assets market.
And that's been true.
We've seen outflows in the industry.
We've seen, you know, macro investors leave.
These were events and situations that happened in 2022 that damaged sentiment, but have very little to do with financial
forward outlooks of what these individual investors are doing.
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