One important thing to note is that these are secondary transactions and not where the stock may potentially trade.
Secondly, Coinbase doesn’t allow any secondary transactions, this was a company sponsored (approved) secondary. As a result this created immense scarcity so you can see how much the price changes just in these limited sales.
Third, as we saw with the last bull run of Bitcoin everything with blockchain in the name had a halo effect so there is definitely upward momentum.
Fourth, there is no Bitcoin tracking security on public markets. Obviously if Bitcoin succeeds so does Coinbase, this is an Avenue to get exposure to that without having to invest in Bitcoin directly and since Coinbase makes money on volatility which Bitcoin has a tremendous amount you get to ride the swings up and down by investing in Coinbase and not having exposure to Bitcoin directly. Investing in the shovels not the gold.
Eventually companies grow in to their valuations and that is determined by supply and demand and ultimately revenue and profits. Coinbase is still growing rapidly and profitable so in today’s market there will be a huge premium for that.
Technically it most closely resembles zoom from a financial perspective and from a capturing the trends perspective so while the valuation may seem high if Coinbase isn’t worth this then neither is zoom.
When will there be a market correction it’s impossible to know. We could have said the same thing for the post two years and it still hasn’t happened.
Don’t forget that getting yield outside of stocks is increasingly difficult and while we are on HN trapped in the echo chamber of tech and tech stocks when you look at the old staples like Coca-Cola they haven’t appreciated during this time.
Large mutual funds could be rebalancing their portfolios to move more into tech which they should have done from 2010 onwards but largely resisted outside of FAANG stocks.
The only thing that is certain is that this is a wild ride.