Coinbase Effect: Increased Volume

Many people in the United States use Coinbase to get their first coins and to get started in cryptocurrency. This has led to the Coinbase Effect. In fact, so many people use Coinbase that the exchange makes 2.7 million dollars in fees everyday. Coinbase was projected to make $600 million dollars last year, and they ended up earning far more. Coinbase made over $1 billion dollars in fees in 2017. Since Coinbase is a private company, there is currently no way for you to invest in the company and capitalize on this extreme revenue- but there could be a way for you to take advantage of the sheer transaction volume of the coins listed on Coinbase.

If you were watching closely, when Bitcoin Cash was launched on Coinbase and GDAX (GDAX is the Coinbase sister platform and digital exchange) the price of Bitcoin Cash initially surged. The surge in volume was so great, that the Coinbase and GDAX servers suffered from technical issues and trading was halted. There were other issues with the launch of Bitcoin Cash on the two exchanges as well, including inability to sell Bitcoin Cash for example. With all of those issues in mind, and the knowledge that it’s impossible to predict exactly what will happen in the future, there is a school of thought that believes a new coin being listed on Coinbase and GDAX can have an increase in the price of that coin.

So we know that Coinbase and GDAX have added coins to their platforms and we know that many people use the two platforms daily to purchase and exchange cryptocurrencies. So how can we determine which coins will be added to the two platforms? The bad news is that we can not with any certainty determine which exact coin will be added, or when that might happen. It is likely reasonable to assume that the two platforms will add coins, so what can we do about that?

Coinbase Criteria For New Coins

Luckily for all of us, GDAX has laid out their criteria for new coins to be considered for listing on the exchange. You can find that detailed criteria here. Nothing is guaranteed but since GDAX took the time and effort to put this guide together, it is likely they will stick to the criteria when choosing a coin to add to the platform. This can put you in a better position to take advantage of the Coinbase effect. Learning the GDAX criteria and using it as a filter for which coins could be added to the exchange could be helpful. For example, there are items GDAX takes into consideration for the coin they are evaluating. These range from the technology of the coin, the team that created the coin, the market for the coin and volume of the coin. Security is critically important to GDAX and there is a section that discusses what goes into GDAX’s security assessment of the coin as well.
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It takes considerable effort to qualify and disqualify which coins might meet the GDAX listing criteria, but it’s an exercise that is worth doing. You will become vastly more familiar with the coin landscape and be able to provide a thoughtful evaluation of each coin you look at. Once you determine a short list of potential coins that GDAX and Coinbase might add it’s important to monitor the news of each coin as well as the news and blogs of both platforms. When news breaks it happens fast, so you will want to be aware of it as soon as possible.

If you want to trade on the Coinbase and GDAX platform, Coinbase has a referral program in place where they will give you $10 in Bitcoin when you buy or sell $100 dollars worth of cryptocurrency on their exchange. Use this link to take advantage of that $10 referral bonus. For our guide on how to use Coinbase read our article here.

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