Coinbase would have made $2 billion simply by purchasing Bitcoin with its seed capital.

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Also the most popular crypto market plans pose a significant threat from the largest cryptocurrency’s 200 percent CAGR.

In 2013, the largest cryptocurrency exchange in the United States may have made more profits by actually purchasing and owning Bitcoin (BTC).

According to data circulated on social media, amid Coinbase’s $800 million income in Q1, the firm would have been wealthier had it used its seed funding cash to purchase BTC.

Coinbase profits lose out to 2013 hodlers

Coinbase posted record sales this week, just days before its initial public offering (IPO) on April 14. With $1.8 billion in revenue, Q1 outperformed the whole year of 2020.

The figures quickly became a topic of discussion as business participants assessed the potential effects of the IPO launch. Other IPOs, such as the latest Deliveroo deal, triggered stock sell-offs.

Amid sky-high valuations and the associated buzz, however, it appears that all Coinbase had to do in order to outperform was to buy Bitcoin.

In particular, the exchange’s $30 million seed investment in 2013 would have been worth up to $2 billion if converted to BTC at the time.

By contrast, Coinbase’s lifetime profits total to date are estimated to be somewhere between $780 million and $1.3 billion.

BTC/USD 1-month candle chart (Bitstamp). Source: Tradingview

“Coinbase is going to list publicly in less than 10 days and reported blowout numbers today (~800m in profit on 1.8B on revenue),” developer Vijay Boyapati commented.

“Sounds great, but imagine how much more they’d be worth if they had held their profits in #Bitcoin instead of dollars for the last 8 years.”

Bitcoin’s compound annual growth rate has topped 200%, and since April 2013, BTC/USD is up over 43,000%.

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Bitcoin supply shortage stays real

Boyapati was referring to another, more contentious part of Coinbase’s business model that has emerged this year. Despite its popularity, executives have often opted to retain a very small volume of BTC.

The exchange holds 4,486 BTC, according to a new statement with US regulators. As Boyapati points out, despite not being an exchange, newcomer MicroStrategy has acquired over 91,000 BTC since August of last year — a holding that has more than doubled in US dollar terms for the firm to date.

“It’s almost as if Coinbase doesn’t even believe in the industry in which they are one of the biggest players. Sad,” he added.

Meanwhile, data released on Wednesday revealed a noticeable increase in exchange outflows this week, indicating that long-term hodling and general interest in purchasing Bitcoin is increasing rapidly.

“Imagine holding MicroStrategy in higher esteem than Coinbase. The latter struggled for eight years to build the most successful Bitcoin company in the world, serving 50 million people,” he responded to a tweet from Casa co-founder Jameson Lopp.

“The former discovered Bitcoin in 2020 and bought a bunch… from Coinbase.”

Bitcoin exchange inflows vs. BTC/USD. Source: Ki Young Ju/ Twitter

Meanwhile, data released on Wednesday revealed a noticeable increase in exchange outflows this week, indicating that long-term hodling and general interest in purchasing Bitcoin is increasing rapidly.

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“Are we in the market cycle high? No,” Ki Young Ju, CEO of on-chain analytics service CryptoQuant, which published the data, commented, highlighting the difference between the current climate and traditional Bitcoin cycle tops.

“When the market reaches its peak, everyone deposits BTC to exchanges to sell.”

Coinbase Pro, the professional trading arm of Coinbase, saw 12,000 BTC leave in a single transaction.

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