OmiseGo’s Coinbase Listing Was a One-Hit Wonder, Says Research

Key Takeaways

  • The Coinbase Effect could be more folklore than fact.
  • Market conditions are highly influential on the impact of a Coinbase listing.
  • A Coinbase nod in a bear market is unlikely to lift a coin out of the doldrums.

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Although OmiseGo (OMG) enjoyed a hefty 144% boost in price after earning a listing on Coinbase, the same cannot be said for other digital assets. New research from CoinMetrics suggests the so-called “Coinbase effect” may not have the powerful impact on token price as previously thought.

Coinbase Listings Tend to Coincide With Price Surges

When Coinbase listed OmiseGo (OMG) on May 19, the price of OMG exploded amid a broader market sell-off.

More than doubling in a week, the phenomenon was put down to the Coinbase Effect – the triggering of demand pressure after Coinbase lists a project or announces an exploratory pre-listing phase.

MakerDAO’s Maker (MKR) token enjoyed a similar impact. When Coinbase announced it would list the token, it lept 40%. Upon its listing, it spiked by 30%.

Overall, the price action around Maker during the period attributable to the Coinbase Effect was around 110%.

Yet research by CoinMetrics shows those gains are more often the exception than the norm. In Maker’s case, the Coinbase Effect’s contribution to that price action has been called into question.

The CoinMetrics analysis finds the Coinbase Effect to have contributed a mere 16% to the price of MKR. 

From metrics assessing coin price behavior against the U.S. dollar in the ten days before and after a Coinbase listing announcement, the price response was anything but consistent.

Asset price (USD) percentage change in the 20 days surrounding a Coinbase listing announcement
Courtesy CoinMetrics, Asset price (USD) percentage change in the 20 days surrounding a Coinbase listing announcement.

OmiseGo aside, the Coinbase Effect has been meaningful only for Tezo (XTZ) and Chainlink (LINK). Other projects have enjoyed only minor changes in price, both positive and negative. The mean effect was 17% and the median, 4%.

When…

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