Timing is key as Bakkt secures NYSE listing

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Bakkt digital assets marketplace is expected to go public on the New York Stock Exchange in 2021, which could pave the way for more cryptocurrency service providers. The Intercontinental Exchange announced on January 11th that its Bakkt cryptocurrency market would soon be listed on the NYSE public exchange. This takes place through a merger with a special purpose vehicle VPC Impact Acquisition Holdings.

The Shell company will be used to merge with Bakkt so that it can be listed on the stock exchange without having to go public. Initial reports suggest that Bakkt will be worth over $ 2 billion after the merger. The exchange plans to raise an additional $ 532 million to fund the advancement of its application, a home wallet and reward app, which is expected to launch in March.

The company has announced that the merger is expected to close in the second quarter of 2021. The newly founded Bakkt Holdings Inc. is then listed on the NYSE.

Much has been done about the investor presentation that was made to the United States Securities and Exchange Commission. The document describes the potential for the cryptocurrency market to reach $ 3 billion by 2025, underscoring the potential value of storage space in the years to come. The total market capitalization for cryptocurrencies topped $ 1 trillion for the first time in January 2021.

Bakkt CEO Gavin Michael told Cointelegraph that given the amount of capital that has already flowed into the cryptocurrency space and the potential growth that is forecast for the next three years, the merger makes sense:

“Bakkt and VPC believe there is tremendous potential to create a marketplace for the nearly $ 2 billion digital asset that exists today and the many others that will emerge as such a marketplace for both brands and consumers exists. “

Michael added that the merger will give Bakkt access to the capital it needs to expand and give consumers more opportunities to free up trillions of dollars held in various digital assets. The company also expects to benefit from the brand awareness that comes from being listed on the stock exchange.

A sign of the future?

Mati Greenspan, cryptanalyst and founder of consulting firm Quantum Economics, told Cointelegraph that the timing of the merger and Bakkt’s decision to go public was not surprising given the current booming cryptocurrency market.

Greenspan noted that the move will undoubtedly be lucrative for Bakkt, and also agreed that the drive to go public is an indication that the traditional financial sector is starting to recognize cryptocurrency and blockchain-focused companies as mature and valuable : “It is a reflection of where these companies are in their lifecycle and how it coincides with the willingness of the traditional market to accept them. “

While some large institutional investors like MicroStrategy have made waves across the industry with their billion dollar purchases of Bitcoin (BTC) in recent months, Greenspan stressed the effectiveness of diversifying investments in this space. While holding cryptocurrencies is a straightforward way of gaining access to the ecosystem, Greenspan said investing in the right companies could potentially be more beneficial:

“There is a natural appetite for all investors to be as diverse as possible. Just like someone whose portfolio is made of gold would invest in mining stocks, or an oil tycoon would invest in their own industry. Often times, investing directly in a company can be more lucrative than buying a token whose value may be unknown. “

Joel Edgerton, chief operating officer of the US cryptocurrency exchange bitFlyer, told Cointelegraph that the timing of the IPO was favorable given the current market highs and strong interest in cryptocurrencies. He also offered an alternative stance on the reasons for the sustained surge, suggesting that small investors and independent companies are driving the cryptocurrency boom: “Coinbase and Bakkt are using the IPO window to give their investors an exit event and subsequent advertising to use their early steps to strengthen their brands. “

Edgerton also believes in the propensity of wise investors to fund companies in the cryptocurrency space without actually buying BTC or other altcoins. The lack of options to achieve widespread adoption of the cryptocurrency also plays a role:

“Investors definitely have an appetite for entering the cryptocurrency space by investing in cryptocurrency companies without directly holding cryptocurrency assets. […] Buying stocks and leveraging industry growth indirectly are definitely attractive. In the absence of an easy-to-purchase ETF or mutual fund for crypto, crypto companies are becoming a proxy cryptocurrency investment. “

Ben Caselin, head of research and strategy for AAX digital asset exchanges, told Cointelegraph that Bakkt’s move doesn’t necessarily reflect recognition from the broader financial industry. Contrary to Greenspan and Edgerton’s views, Caselin also stressed the fact that if Bakkt’s shareholders finally go public, they will assume the exchange will be successful in the future. While this is closely related to the cryptocurrency markets, Caselin draws a clear line between direct investments in cryptocurrencies and exchanges:

“It is important to understand that investing in a cryptocurrency exchange is not a substitute for holding actual digital assets or trading futures. This is basically one way of getting involved in the broader industry. In particular, the stake in Coinbase or shares in Bakkt is based on the assumption that this exchange will do well in the coming years. “

IPOs and mega deals

Companies like Bakkt and Coinbase seem to have gained a head start in the race for access to public funds and advertising as they try to build on their current offerings. Although Bitcoin has hit new all-time highs on a number of occasions over the past few weeks, Edgerton believes the space is still in its infancy and investment by the general public will become a major growth driver over the next decade: “IPOs are obviously a major factor Funding source and a successful IPO should also encourage VCs to invest in the next big crypto unicorn. “

Related: Coinbase IPO to further legitimize crypto, but restrictions remain

Greenspan also sees more billion dollar deals for the cryptocurrency space on the horizon, while some of them may just be carried out with the emerging technology that will fuel the future of finance: “As the industry grows, there will be a lot more crypto-mega-deals. Deals. Perhaps one day all IPOs, acquisitions, and mergers will take place using distributed ledger technology. “