Coinbase is the largest cryptocurrency exchange headquartered in the United States. Until recently, Coinbase was quite conservative, with only Bitcoin (BTC), Litecoin (LTC), Ethereum (ETH), Bitcoin Cash (BCH), and Ethereum Classic (ETC) listed.
Each of these cryptocurrencies experienced major rallies due to their listing on Coinbase, and this became known as the Coinbase Effect. Now, Coinbase has upped the ante and is rapidly listing 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 more expected in coming months. The Coinbase Effect has clearly changed since these rapid listings began, and this article aims to quantify the evolution of the Coinbase Effect.
Aside from Bitcoin which was automatically the first cryptocurrency on Coinbase, the other 4 initial Coinbase cryptocurrencies saw major and sustained price increases. Ethereum surged 30 percent when it was listed on Coinbase, Litecoin rallied 220 percent in 1.5 months, Bitcoin Cash spiked 140 percent within a day, and Ethereum Classic rallied 25 percent in a day and 67 percent within 2 months. This is likely because being listed on Coinbase exposed these cryptocurrencies to a large United States user base, at a time when people were interested in diversifying their cryptocurrency portfolios, and there were not many options to choose from on Coinbase.
0x (ZRX) was added to Coinbase on Oct. 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 listing process. However, 0x (ZRX) has been in a nearly constant decline since that peak and is now worth $0.35, almost half of what it was worth before the listing. Thus, the 0x (ZRX) listing showed a major change in the Coinbase Effect, from being a mechanism that can cause a long-term rally to just causing a pump and dump.
Basic Attention Token (BAT) rallied from $0.24 to $0.38 (58 percent) during the Coinbase listing process and has declined since then to $0.14. This behavior is very similar to the pump and dumps coinciding with the 0x (ZRX) listing. Basic Attention Token (BAT) was the 2nd ERC-20 token listed on Coinbase, and was released by itself, like 0x (ZRX).
USD Coin (USDC) was the first stablecoin to be offered by Coinbase and is a partnership between Circle and Coinbase. USD Coin (USDC) was released in October 2018 amid the Tether (USDT) crisis, an optimal time to launch a stablecoin. The circulating supply of USDC surged from $0 to $228 million. This listing was quite successful but cannot be compared to other listings since its a stablecoin and the price is meant to be $1 per USD Coin (USDC).
After USD Coin (USDC), Coinbase began to list new tokens in batches instead of one at a time. The first batch began its listing process on December 7 and included Civic (CVC), district0x (DNT), Loom Network (LOOM), and Decentraland (MANA).
Civic (CVC) certainly saw an increase in trading volume when the listing occurred, but perhaps larger market forces overwhelmed the effect of the listing, and the Coinbase Effect appears to be negligible. The price of Civic (CVC) is about the same now as it was before the listing. There was a short-lived 18 percent price rise during the day of the listing.
District0x (DNT) had an obvious Coinbase Effect, with the price rallying from one cent to $0.0165 (65 percent) during the listing process. The rally broke through right after the listing process finished, and DNT declined to as low as one cent before regaining ground to $0.0125 because of the crypto rally this past week. Even though the Coinbase Effect for DNT was significant during the listing, it did not have much of a lasting impact.
Loom Network (LOOM) briefly rallied from $0.038 to $0.048 (26 percent) during the listing process, but only a few days later, Loom Network (LOOM) was back to $0.038. Now Loom Network (LOOM) is at $0.048 following the past week’s crypto rally. In November, before the Coinbase listing was known, Loom Network (LOOM) was even higher though, so the Coinbase Effect appears to be negligible aside from the brief pump and dump during listing.
Decentraland (MANA) saw a strong and unusual rally before the listing was announced publicly. At the beginning of December, before the rally started, Decentraland (MANA) was at 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 the past week’s crypto rally, Decentraland (MANA) has crawled back to $0.054, lower than it was before the Coinbase listing.
The second batch of ERC-20 tokens headed for Coinbase listings was announced only three days ago, so technically the listing process is ongoing, making the data on the Coinbase Effect for these cryptocurrencies incomplete. The second batch includes DAI, Maker (MKR), Golem (GNT), and Zilliqa (ZIL).
DNT had a sharp and brief four percent rally when the listing was announced and has now declined to less than the pre-listing price. This is despite DNT being live for limit trading. Golem (GNT) has rallied from $0.056 to $0.072 (29 percent), but the listing process has just finished, and the longer term market reaction is unknown. Maker (MKR) and Zilliqa (ZIL) are not yet live for trading but are seeing much higher trading volume worldwide and price increases due to speculation. Maker (MKR) is up 28 percent and Zilliqa (ZIL) has rallied nearly 40 percent. DAI is seeing much higher volume, but no price increase since it is a stablecoin, although there was a clear price shock due to DAI being thrown out of equilibrium when the listing was announced.
The general trend being observed is that as Coinbase ramps up listings, the Coinbase Effect is transitioning from a sustained long-term rally to a short term pump and dump. That being said, when the next major long-term crypto rally finally comes, the tokens listed on Coinbase could rise faster than those not listed on Coinbase due to their ease of access for U.S. customers.