Parsing FTX’s 2021 growth in a Coinbase context

Over the weekend, CNBC reported a set of revenue and profit figures from FTX, a global cryptocurrency exchange that raised a mountain of capital in the last year and is currently expanding its product remit. Its founder, Sam Bankman-Fried, has been a key player in the crypto market in recent months, involved in several deals as the decentralized economy weathers a slowdown amid a barrage of bad news.

The data that CNBC uncovered paints a picture of strong growth, but a limited one — it didn’t get ahold of Q2 numbers. The information, FTX’s trailing private market cap, and recent data concerning Coinbase’s financial performance set up an interesting question: Is Coinbase cheap, or is FTX overvalued?

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Naturally, because we’re dealing with one private company and one public concern, we will have to endure information asymmetry. Coinbase is public, meaning we have basically all of its data, making the U.S. company a key barometer in our ability to understand the economics of crypto trading.