Six months after valuing itself at $8 billion, San Francisco-based cryptocurrency giant Coinbase is in talks to close a $500 million funding round at the previously self-assigned valuation.
According to a breaking report by Recode that cites insiders familiar with the matter, Coinbase is in talks with Tiger Global, a U.S.-based hedge fund, and its existing shareholders for an investment of up to $500 million at an $8 billion valuation.
While additional terms of the potential investment round have not yet been leaked, the insiders note that a portion of the capital is expected to buy out existing shareholders to condense the company’s cap table.
It was revealed last April that Coinbase offered an equity package to Earn.com investors, as part of its $100+ million acquisition, that valued its stock at $8 billion. This was a significant bump from the $1.6 billion VC valuation made in the summer of 2017 and brought criticism since the valuation wasn’t made by a third-party institutional investor.
The latest report undoubtedly will silence these critics, but Coinbase is still facing an uphill battle in terms of growth and user adoption given the relative saturation with the currently addressable market.
According to a recent report published by Diar, a market research group that cites data from CoinAPI, the total Coinbase trading volume for the month of January was more than $20 billion. This number has since tumbled, due in large part to the ongoing crypto bear market, hitting as low as $3.4 billion in July.
Nonetheless, many research groups are optimistic about the underlying growth of the market. Specifically, a recent report by ICO advisory firm Satis Group projects that cryptocurrency trading volume will jump 50% in 2019 and will continue to grow at a 9% CAGR through 2028.
Given that Coinbase is currently the simplest path for new users to purchase crypto, it stands to reason that they will benefit greatly from a global growth in trading activity.
More: Coinbase, the startup at the core of the crypto craze, is now considered an $8 billion company
Related: Coinbase Values Itself at $8 Billion
Disclaimer: This article’s author has cryptocurrency holdings that can be tracked here. This article is for informational purposes only and should not be taken as investment advice. Always conduct your own due diligence before making investments.