Right now Coinbase is trading around 350 making it worth about 100B, the total value of bitcoin is about 1.000B and all cryptocurrencies that are tradeable on Coinbase is maybe 1.500B.
So the ratio between the value of the exchange is about 1/10 - 1/15 of the total value of the market it trades. (For comparison take say Interactive Broker's market value to the market value of the total stock market.)
And Coinbase far from the only exchange out there. With this valuation I bet the value of the exchanges is higher than the value of the total cryptocurrency market.
Comparing the Coinbase market cap and the total market value of Bitcoin is not comparing apples to apples. Just in the last 24 hours $74B worth of Bitcoin has traded hands. The entire purpose of Coinbase is to facilitate that exchange and take a cut for doing so. If the trade rate doesn't change the entire "market cap" dollar value of bitcoin will trade hands every two weeks. Being responsible for facilitating a sizeable percent of those transactions is pretty awesome and very valuable.
With that said, I think they are overvalued at $100B. Not because of the total market cap size of crypto, but because their revenue doesn't justify a valuation that high.
I think a more relevant metric would be the velocity of the Cypto market rather than the total value of the number of coins out there. Since Coinbase is taking a % of every transaction, if you send .1 bitcoin once then they get .5% of that. But if you send .1 bitcoin 10 times then they get .5% of 10*.1 (not the real % obviously).
I've seen numbers around 250k to 350k transactions per day for Bitcoin and more than 1 million for Ethereum. So if Coinbase can capture a decent percent of that market then you're talking about tens of millions in revenue per day (if not more).
From a quick search it looks like Coinbase had around $1.8 billion in revenue in the first quarter. That could/should grow along with popularity of crypto in general.
It's not even nearly the biggest exchange!
Binance trades 10x the volume, so if Coinbase is worth 1/10 of the crypto market, is Binance worth 1x the crypto market?
One reason certainly is that Coinbase charges very high fees, namely around 0.6% of the traded amount. The other reason is that crypto is traded a lot. If 1/6 of the entire crypto market cap trades on Coinbase every quarter (and that seems to be the case), then Coinbase has earnings of 0.1% of the entire crypto market cap every quarter, or 0.4% per annum. Apply a 25 P/E ratio, and you get a value for Coinbase of 10% of the crypto market cap.
Maybe because traditional investments have a lot of uses. Since crypto is pretty much just speculative right now, it makes sense that the exchanges are the ones capturing that value.
So the ratio between the value of the exchange is about 1/10 - 1/15 of the total value of the market it trades. (For comparison take say Interactive Broker's market value to the market value of the total stock market.)
And Coinbase far from the only exchange out there. With this valuation I bet the value of the exchanges is higher than the value of the total cryptocurrency market.