Because their growth trajectory is insane. They are making a ridiculous amount of money & will be around for a long time. The real question is how MUCH should you pay for the stock? It's worth something, but I haven't tried to value it & I have no idea what it's worth. More than zero, less than infinity.
Thankfully a lot of people do know how to price the value of a stock. A good number to target is a P/E ratio of 30 for a tech stock in growth mode.
Tomorrow COIN releases their earnings report. EPS is expected to be 0.17% of the share price. So I would expect the blood bath to continue on COIN stock. If I had money available, I would buy put options tomorrow on COIN.
A P/E of 30 is appropriate for a value stock (steady earnings) at 3% interest rates. (How did I get that figure? P/E of 30 is about a 3% earnings yield, and if earnings are steady the stock is effectively equivalent to a bond at that rate.)
For a growth stock, you have to ask yourself "How much growth do I believe is left in this market?" A company that's growing at 20% annually but has only a year left before it plateaus (like FB or NFLX last year) should trade at about a 20% premium; that'd imply a P/E of 35. But a company that's growing at 20% annually and has a decade of growth left (like FB at IPO) should trade at about 6x that original multiple, for a P/E of 180. An earnings yield of 0.17% implies a P/E of about 600, which implies that earnings should grow 20x before the company reaches a steady state. That's a little high but not totally out of the ballpark for Coinbase (earnings: $3B, market cap $21B) if you assume its comps are companies like Bank of America (earnings: $32B, market cap $293B) or J.P. Morgan Chase (earnings: $48B, market cap $363B).
Also note the effect of interest rates on valuation. At 10% rates, a value stock should have a P/E of about 10. For a growth stock, the effect is much more pronounced, because in the decade that it takes for the company to start raking in serious cash, that bond will be worth 2.6x as much and the company's long-term earnings need to be discounted accordingly, on top of the lower steady-state P/E. That's the real reason why tech growth stocks shot up so high after the pandemic and now have crashed so hard. With higher rates, large cash flows in the future are worth relatively less because you can earn more with safe investments now.
A P/E of 30 is an earnings yield of about 3% (1/30). A steady cash-flowing stock will compare favorably to any bond with an interest rate of < 3%. When bonds are yielding < 3%, that's a good deal.
A P/E of 15 is an earnings yield of about 6% and change. When rates are in the 6% range, this is fairly valued.
A P/E of 6-10, like what was considered good in the late 70s, is an earnings yield of 10-18%. Sure enough, in the late 70s when you could actually get these P/Es, interest rates were around 18%.
There's math behind these rules of thumb. It all comes down to discounted cash flow analysis - if you understand the inputs that go into that formula, what the market does makes a lot more sense.
Bitfinex, which is incorporated in the Cayman Islands, is an example of your “ideal” bank. It has seen its US correspondent banks flee several times, leaving Bitfinex users unable to withdraw USD.
Coinbase is a US regulated exchange which US banks are much more willing to cooperate with since they perceive it as safer than working with some Cayman Island outfit.
Bitcoin doesn't produce anything, Coinbase does.
What you're describing is speculating / gambling, betting on some kind of soaring event happening.