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Coinbase is the largest exchange of cryptocurrencies based in the United States. Until recently, Coinbase was rather conservative, with only Bitcoin (BTC), Litecoin (LTC), Ethereum (ETH), Bitcoin Cash (BCH) and Ethereum Classic (ETC).
Each of these cryptocurrencies recorded significant rallies due to their listing on Coinbase, and this became known as the Coinbase effect. Now, Coinbase has upped the ante and is quickly listing the Ethereum ERC-20 tokens, including 0x (ZRX), Basic Attention Token (BAT), USD Coin (USDC), Civic (CVC), district0x (DNT), Loom Network ( LOOM), Decentraland (MANA), DAI, Golem (GNT), Maker (MKR) and Zilliqa (ZIL) with higher expectations in the coming months. The Coinbase effect has clearly changed since these quick lists began and this article aims to quantify the evolution of the Coinbase effect.
Apart from Bitcoin which was automatically the first cryptocurrency on Coinbase, the other 4 initial Coinbase cryptocurrencies have seen higher and sustained price increases. Ethereum rose 30% when it was quoted on Coinbase, Litecoin gained 220% in 1.5 months, Bitcoin Cash reached 140% in one day and Ethereum Classic earned 25% in one day and 67% within 2 months. This is likely because being listed on Coinbase has exposed these cryptocurrencies to a large US user base, at a time when people were interested in diversifying their cryptocurrency portfolios and there were many options to choose from on Coinbase.
0x (ZRX) was added to Coinbase on October 11, 2018 and was the first ERC-20 token to be listed. 0x (ZRX) increased from $ 0.63 to $ 1.01 (60 percent) during the Coinbase quote process. However, 0x (ZRX) was in an almost constant drop from that peak and is now worth $ 0.35, almost half of what was worth before the listing. Therefore, the list 0x (ZRX) has shown an important change in the Coinbase effect, from being a mechanism that can cause a long-term rally only due to a pump and dump.
The Basic Attention Token (BAT) rose from $ 0.24 to $ 0.38 (58%) during the Coinbase listing process and has since declined to $ 0.14. This behavior is very similar to the pump and landfills that coincide with the list 0x (ZRX). Basic Attention Token (BAT) was the second ERC-20 token listed on Coinbase, and was released by itself, as 0x (ZRX).
USD Coin (USDC) was the first stablecoin to be offered by Coinbase and is a partnership between Circle and Coinbase. The USD (USDC) currency was issued in October 2018 during the Tether crisis (USDT), an optimal time to launch a stablecoin. The USDC's current offering rose from $ 0 to $ 228 million. This announcement has been quite successful but can not be compared to other listings as it is a stablecoin and the price is intended as $ 1 per USD (USDC) currency.
After the USD (USDC) currency, Coinbase started listing new tokens in batches instead of one at a time. The first lot started its listing process on December 7th and included Civic (CVC), district0x (DNT), Loom Network (LOOM) and Decentraland (MANA).
Civic (CVC) has certainly seen an increase in the volume of trade when the announcement occurred, but perhaps the major market forces have overwhelmed the effect of the listing and the Coinbase effect seems negligible. The price of Civic (CVC) is almost the same now as it was before the listing. On the day of the listing there was a 18 percent short-term price increase.
District0x (DNT) had a clear Coinbase effect, with the price rally from 1 cent to $ 0.0165 (65 percent) during the listing process. The rally exploded immediately after the end of the listing process and the DNT fell to a low of one cent before it resumed $ 0.0125 due to last week's encryption. Although the Coinbase effect for DNT was significant during the listing, it did not have a lasting impact.
Loom Network (LOOM) briefly reorganized from $ 0.038 to $ 0.048 (26 percent) during the listing process, but only a few days later, Loom Network (LOOM) returned to $ 0.038. Loom Network (LOOM) is now at $ 0.048 after last week's crypto rally. In November, before the list of Coinbases was known, Loom Network (LOOM) was even higher, so the Coinbase effect seems to be negligible apart from the short pump and dump during the listing.
Decentraland (MANA) saw a strong and unusual rally before the listing was announced publicly. At the beginning of December, before the start of the rally, Decentraland (MANA) was six cents. During the listing process, Decentraland (MANA) pumped to $ 0.065 (eight percent) before falling to $ 0.04 less than a week later. During last week's crypto rally, Decentraland (MANA) returned to $ 0.054, lower than before Coinbase's listing.
The second batch of ERC-20 tokens was intended for Coinbase lists it was announced only three days agotechnically, therefore, the quotation process is underway, making the data on the Coinbase effect incomplete for these cryptocurrencies. The second batch includes DAI, Maker (MKR), Golem (GNT) and Zilliqa (ZIL).
DNT reported a sharp and short increase of four percent when the listing was announced and has now fallen below the pre-quotation price. This is despite the DNT being active for limit trading. Golem (GNT) has recovered from $ 0.056 to $ 0.072 (29%), but the listing process has just ended and the long-term market reaction is unknown. Maker (MKR) and Zilliqa (ZIL) are not yet alive for trading, but are seeing a much higher trading volume worldwide and price increases due to speculation. Maker (MKR) has increased by 28% and Zilliqa (ZIL) has recovered almost 40%. DAI is seeing a much higher volume, but no price increase because it is a stablecoin, although there has been a noticeable price shock due to the fact that DAI was put out of balance when the listing was announced.
The general trend that is observed is that while Coinbase increases the listings, the Coinbase effect is moving from a long-term sustained rally to a short-term pump and landfill. That said, when the next major long-term encryption finally arrives, the tokens listed on Coinbase could increase faster than those not listed on Coinbase due to their ease of access for US customers.
