The legendary „Coinbase Effect“ has a much more limited impact on the price of new coins than is generally believed, according to Coin Metrics.
The crypto coin data analysis company has just published a report that examines the impact that the price on the large U.S. crypto coin exchange has on the price of a given Bitcoin Era crypto asset.
The report concludes that the effect is very mild, as Coinbase’s new markets typically record average price results of between -1% and +14% against the USD, Bitcoin (BTC), and Ether (ETH) from 10 days before to 10 days after the quote is announced.
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Coin Metrics also examined the price impact of Coinbase’s announcements in relation to the markets being considered for quotation, and found that such events could not produce significant deviations in market activity beyond the prevailing cryptotrends.
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The analysis described that the yields over 50% generated by Tezos (XTZ), Chainlink (LINK), and OmiseGo (GMO) are „atypical“.
Six of the 16 cryptoactives listed by the exchange and examined in the report produced negative price returns 10 days after being listed on the exchange, while three of the markets recorded gains of less than 5%.
Coin Metrics found that the average – or most common – price performance of a Coinbase Pro market days after its launch was a 4% gain.
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The report also examined the impact of Coinbase’s announcements in relation to the prospective lists under consideration, and concluded that the short-term impacts of „exploration“ announcements „tend to deviate temporarily to the general market trend at that time“.
The markets being examined during the late 2018 bear market were found to have tended to fall overall, while the cryptoactives explored during the „flat, choppy market of summer 2019“ recorded inconsistent upward and downward movements, and the currencies examined during the „meltdown“ market of the second quarter of 2020 were found to have produced slight gains on average.
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With the industry consensus that Coinbase is the largest „retail“ gateway, the impact of Coinbase’s listing should have some significance on the assets that could make the cut. However, there is another major factor influencing the price impact: market conditions,“ the report concluded.
