It looks like new tokens have found a new home, Coinbase, as they gained 91% in five days.
Crypto analytics firm Messari confirmed that to be true through a report that it did. The report dubbed the “Coinbase effect” got many hooked. The only difference is that the Coinbase effect is not consistent and not as rosy as many assume it to be. In the Coinbase effect, there is an analysis of the performance of 28 Coinbase listings in five days and compared it to rival exchanges such as 22 Binance listings, 11 Kraken, 19 Gemini listing, and 14 OKEx listings in the same time frame.
As we can see, Coinbase had the highest number of listings which may have affected the return rate. While Coinbase had an average rate of 91%, there was no consistency. The 91 average does not indicate a possibility of a 32% loss and a gain of 645% in the same period. Even though the other tokens seem to have a lower average income, they are more stable, all factors considered. They had a 25% average loss and 60% profit-making the average gain to be 20%.
What’s Coinbase secret sauce?
Even though Coinbase is high profiled, it looks like the performance of the tokens is beyond them. Research indicates that external factors may drive the massive gains of tokens once they are listed on Coinbase. The top gainers are District0x and Civic, which increased by 645% and 493%, respectively.
From Messari’s report, even when other outliers are controlled, Coinbase still outperformed other rival exchanges with an average gain of 29%. The second position is OKEx with an average gain of 20%, Kaken with 15%, followed by FTX at 12%, Binance 0%, and Gemini suffering a loss.
The main reason Coinbase is acing it is its popularity and brand position. The SEC is also stringent on other exchanges, which locks out many exchanges from offering their services to United States residents. This also lowered the number of investors interested in venturing into altcoins.
The new token listings gained massively because of investors’ rush to participate in the altcoin investment proceeds. It is, however, important to note that note all tokens will have a positive gain and will not be aggressively adopted.