Back in 2018, Coinbase, the most popular retail crypto exchange in the United States, only listed a handful of major cryptocurrencies including Bitcoin (BTC), Litecoin (LTC), Ethereum (ETH), Ethereum Classic (ETC), and Bitcoin Cash (BCH). Each time one of these major cryptocurrencies were listed on Coinbase there would be a huge rally due to millions of retail investors in the United States buying up that cryptocurrency as soon as they got the chance, and this rally was called the Coinbase Effect.
However, Coinbase began to list lots of cryptocurrencies towards the end of 2018 and throughout 2019, and the more cryptos they listed, the weaker the Coinbase Effect became. The Coinbase Effect transitioned from being a sustained rally to a brief pump and dump, to having no effect at all. Indeed, many cryptos which were listed on Coinbase saw zero gains, if not losses.
All of this being said, according to Messari Research, the Coinbase Effect is back. Coinbase’s recent crypto listings have seen big gains in the 24 hours after they were listed, including Numeraire (NMR) rallying 200%, Compound (COMP) rallying 117%, CELO rallying 53%, Band Protocol (BAND) rallying 44%, Maker (MKR) rallying 40%, OMG Network (OMG) rallying 24%, and Algorand (ALGO) rallying 21%.
Only one of the recently listed cryptos on Coinbase, UMA, failed to rally.
Thus, the Coinbase Effect is back, with newly listed cryptos seeing strong rallies right when they are listed. In general, it seems the Decentralized Finance (DeFi) craze, and the associated surge in speculation, is the reason why the Coinbase Effect has come back to life. Indeed, several of the cryptos which were recently listed on Coinbase, especially Compound (COMP) and Maker (MKR), are associated with DeFi platforms.
On a final note, now that the Coinbase Effect appears to be back in force, it would be wise for crypto traders to keep track of Coinbase listings, since it could be easy to make some quick money when a new crypto is listed on Coinbase going forward.