- Base Layer
- Posts
- 👀 ONE undervalued opportunity right now
GM everyone. This is 2036. We scroll for gems all day so you don’t have to.
Here’s what we’re serving up today 🍲: everyone’s got their eyes on Solana. But you know the saying - be fearful when others are greedy, and greedy when others are fearful.
What is undervalued today that we can rotate some of our gains into?
Let’s dig in.
Since January, we’ve talked about owning Solana as part of a diversified portfolio.
And what a ride. Solana is up +475% year-to-date - a huge win for holders.
If you made $$ - congratulations.
But as we explained last Monday, any time an asset rises substantially and becomes too popular - it’s time to be cautious.
Today, Solana is all anyone can talk about. Solana this, Solana that.
We’ve seen this scenario play out a thousand times before.
Solana will probably do really well in this bull market.
But I wouldn’t be surprised if Solana pulls back a little in the short term.
That means it could be a good time to rotate some profits into better opportunities that have lagged the broader market.
Like Coinbase ($COIN).
Coinbase is the second-largest crypto exchange in the world.
But it’s a lot more than that. Coinbase is becoming crypto’s everything-app.
Wanna trade? Coinbase. Wanna stake? Coinbase. Wanna custody? Coinbase.
The list goes on:
Coinbase’s come a long way.
Earlier this year, Coinbase launched its own Layer 2 - Base. It also owns a stake in Circle, the issuer of stablecoin USDC that’s considering going public.
Today, ∼54% of its revenues come from interest, staking, and subscriptions - up from 10% two years ago.
But Coinbase is a publicly traded company valued by traditional boomer investors on Wall Street.
And right now, Wall Street doesn’t believe crypto will recover.
The consensus on Wall Street is that Coinbase will be roughly flat over the next year.
And that’s where our arbitrage comes in.
Wall Street doesn’t understand crypto.
That’s why Coinbase stock has been underperforming lately.
But the bull market has already begun.
Bitcoin is up +122% year-to-date, and the Bitcoin ETF + halving are just around the corner.
It’s just a matter of time before Coinbase stock catches up.
[note: the same is true for some Bitcoin miners, which will be the topic of another newsletter soon].
Coinbase is the go-to crypto app for the average person entering crypto.
They don’t want to stake ETH natively using Lido. No, they want to click two buttons on Coinbase and watch the passive income flow.
Eventually, Wall Street will recognize Coinbase as crypto’s everything app, and the stock will trade like an index fund for crypto.
It’s hard to buy laggards. You think they might never recover.
But the time to be greedy is when others are fearful.
