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Strange Happenings

Something interesting happened yesterday...and as Grant Williams would say, it made us go "hmmmm."

We try to listen and observe the world around us, in an effort to understand. Occasionally something happens that seems counter-intuitive, or perhaps sets off alarm bells in our head. yesterday, one such thing happened.

The much anticipated direct listing of Coinbase went live yesterday, behaving as you might expect: reaching an apogee of nearly $430, and a nadir of $310. There wasn't anything particularly surprising or alarming about the trading action. This type of issuance will always be heavily traded and volatile for several trading sessions.

Coinbase is of course the preeminent crypto trading platform, sporting 56 million active users, and $1.8b in revenue. Its closing valuation around $85b makes it the most valuable trading platform in the world, besting the behemoth CME Group by over $10b. It is by every measure, a phenomenal business.

This was a watershed moment crypto, tech stocks and the Nasdaq in general. An $85b direct listing of the best company in a new sector in a raging bull market? Yep, that's ultra hot.

It wasn't what happened in Coinbase that gave us pause, however, it was what happened around the hype: the rest of the Nasdaq closed negative by a solid margin.

We're careful with our intuition, because it is so often inferior to hard work, but this does not smell right. This should have been a huge day for tech stocks, and instead it landed with a thud. It is just one data point, but it is worth underlining.

If you're pouring money into your 401k or markets in general, maybe pause and reflect on this for a bit. It might be time to consider shifting gears out of paper assets.

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