How Coinbase Became the Go-To Exchange for Major Bitcoin Purchases

The Rise of Institutional Bitcoin Purchases

In 2020, a monumental wave of institutional investments surged into the cryptocurrency market, with Coinbase, the largest exchange in the U.S., leading the charge. Among the most notable transactions was MicroStrategy’s jaw-dropping $425 million Bitcoin acquisition, which coincidentally put Coinbase on the map as the primary execution partner.

Understanding the Epic Purchase

On September 2020, MicroStrategy identified Coinbase as their preferred platform for executing their Bitcoin purchase. Brett Tejpaul, the head of institutional sales at Coinbase, shed light on the complexities of this colossal transaction. He highlighted the company’s advanced execution capabilities, stating that they managed to facilitate the purchase without disturbing the market—a feat not easily achieved.

Pre-Trade Calls: Planning the Success

Preparation is key, especially when you’re dealing with hundreds of millions. Prior to executing the massive trade, Coinbase engaged in a series of pre-trade conversations with MicroStrategy to understand their execution goals thoroughly. By developing a targeted trading strategy, they ensured that all bases were covered, which is crucial when making purchases of such magnitude.

Execution Strategy: The Art of Timing

Once the plan was in place, it was time to roll up their sleeves. Coinbase employed a sophisticated “Time Weighted Average Price” algorithm, aiming to execute the trade over five strategic days. Each morning, the MicroStrategy team jumped on a call with Coinbase’s trading team to align on trades and report fill statuses. This meticulous approach paid off, as the initial investment of $250 million led to an elevated additional investment of $175 million, making it a total of $425 million.

Looking Ahead: More Institutional Collaborations

Following the success of their collaboration with MicroStrategy, Coinbase expressed a keen desire to further assist institutions in navigating the often-turbulent waters of cryptocurrency investment. With a focus on aligning interests and providing the best available market prices, they aim to guide more corporate actors looking to diversify their capital allocation strategies in crypto. As Tejpaul aptly noted, they hope this groundbreaking transaction serves as a pivotal moment for the cryptoeconomy.