Coinbase Initially Considered Following MicroStrategy’s Example, Currently Holding 9,000 Bitcoins and Not Stopping There
Bitcoin’s Rise Sparks Adoption of Reserve Strategy
Since the surge in Bitcoin prices last year, coupled with the favorable regulatory environment for cryptocurrencies under Trump’s administration, numerous companies have begun to emulate the Bitcoin reserve strategy pioneered by Strategy (formerly known as Microstrategy). Even Brian Armstrong, CEO of the American cryptocurrency exchange Coinbase, candidly admitted that Coinbase had considered investing 80% of its balance sheet in Bitcoin but ultimately made a conscious choice regarding the associated risks.
Coinbase Considered Implementing Bitcoin Reserve Strategy
According to a report by Bloomberg, the largest cryptocurrency exchange in the U.S., Coinbase, had contemplated allocating 80% of its balance sheet to Bitcoin. CEO Brian Armstrong stated:
“Over the past 12 years, we indeed had moments where we asked ourselves whether we should put 80% of our balance sheet into cryptocurrencies?”
This specifically referred to Bitcoin. However, Coinbase ultimately made a conscious decision against this strategy due to potential adverse effects on the company’s cash position as a startup, which could “stifle” the San Francisco-based company.
Coinbase’s Long-term Commitment to Bitcoin
Coinbase holds various cryptocurrencies such as Bitcoin, Ethereum, and SOL for long-term investment purposes, operational needs, and as collateral for borrowed crypto assets. According to its latest financial report, as of March 31, Coinbase held the following as long-term investments:
- Bitcoin: 9,267 coins (up from 6,885 coins at the end of December)
- Ethereum: 137,334 coins (up from 115,700 coins at the end of December)
Coinbase’s Chief Financial Officer, Alesia Haas, also participated in the discussion, stating that the company does not wish to be viewed as competing with its customers who invest in cryptocurrencies. However, when discussing increasing the company’s cryptocurrency holdings, he remarked:
“Rest assured, we will not stop here.”
Coinbase Acquires Deribit, Launches 24/7 BTC and ETH Futures Trading
Earlier, Coinbase announced the acquisition of the cryptocurrency derivatives exchange Deribit for $2.9 billion. Industry analysts welcomed this news, as it will allow the U.S. exchange to immediately engage in derivative trading globally, providing institutional-grade infrastructure in response to the rapidly growing demand for digital asset products. Derivative trading typically constitutes a much larger proportion of total cryptocurrency trading volume compared to the spot market and offers higher profit margins, which will help Coinbase maintain a dominant position in the U.S. market.
Coinbase subsequently launched 24/7 trading for Bitcoin and Ethereum futures, emphasizing that this is the first time a CFTC-regulated exchange has offered leveraged futures contracts for around-the-clock trading.
Risk Warning
Investing in cryptocurrencies carries a high degree of risk, and prices can be highly volatile, leading to the potential loss of your entire principal. Please carefully assess the risks involved.
