Does a Coinbase Listing Have a Meaningful Impact on a Coin’s Price? Not Really
It’s a narrative all too commonly recited by cryptocurrency investors: if my coin gets listed on Coinbase, its price will surge. However, the data surrounding these listings is less than convincing.
First, it’s important to understand the reasoning behind price surges associated with exchange listings. The general idea is that with the listing comes additional liquidity and buyer awareness, opening up the coin to a larger investor base. This is a phenomenon most clearly seen when lesser-known altcoins are listed on Binance, the world’s most popular crypto exchange.
A listing on Coinbase is unique, as it brings the coin not only to amateur retail investors but also professional traders and accredited institutions via a number of products.
Nonetheless, recent outcomes from listings have resulted in relatively short-lived and unsubstantial bullish price action. For instance, the recent listing of 0x (ZRX), an open protocol that facilitates the low-friction, peer-to-peer exchange of ERC-20 tokens on the Ethereum blockchain, resulted in a 25% increase in price — a rather underwhelming jump given that ZRX is still down over 50% from 2018 highs.
Another example is the previously listed Ethereum Classic (ETC). After it was announced last Summer that ETC would be brought to Coinbase, the price jumped from $13.00 to a peak of $18.45, before suffering from a significant downtrend as market conditions soured. ETC now trades around $9.77, well below its pre-Coinbase price.
This same pattern can be seen in the July 2016 listing of Ethereum (ETH), where user numbers were still quite low and little gains resulted from the announcement. Litecoin (LTC) did see a boost in price following its listing on Coinbase in May 2017, however, the larger cryptocurrency market was also gearing up for a major bull run at the time.
Thus, the outcome of a listing on Coinbase may have less to do with the app itself and more to do with the overall macro conditions. This is compounded by the fact that Coinbase has suffered significant user retention problems over the last 10 months, with USD volumes for BTC dropping from $24.3 billion in Q4 2017 to $5.4 billion in Q3 2018, a 78% fall.
Additionally, unlike listings on Binance, the coins being added to Coinbase are already widely known and easy enough to purchase without Coinbase’s help.
All things considered, the constant chants by passionate investors for a listing on Coinbase is perhaps a bit misguided and will continue to mean less as Coinbase implements its rapid listing mechanism that was announced last month.
Photo: Marco Verch / Flickr
Disclaimer: This article’s author has cryptocurrency holdings that can be tracked here. This article is for informational purposes only and should not be taken as investment advice. Always conduct your own due diligence before making investments.