What Happens When a Coin is Listed on Coinbase: The Coinbase Effect Explained
The term ldquo;Coinbase Effectrdquo; has become a phenomenon in the crypto industry, where getting listed on Coinbase can significantly boost the value of a token or coin. This article explores what it means for a coin to be listed on Coinbase and the potential impacts a listing can have.
Understanding the Coinbase Effect
The theory behind the Coinbase Effect is straightforward: once a token is listed on Coinbase, it can experience a surge in value, often leading to a rapid increase in price. This phenomenon is due to the platform's reputation and the increased visibility that comes with being listed on such a prominent exchange.
What Does It Mean When a Coin is Listed on Coinbase?
When a coin is listed on Coinbase, it means that investors can now trade this virtual currency on their platform. This listing process involves several important factors:
Thresholds for Financial and Regulatory Viability: The coin must have met specific financial and regulatory standards, ensuring that it is both financially sound and compliant with relevant regulations. Trustworthiness: The exchange, Coinbase, assesses the level of trust in the coin, ensuring that it meets the platform's standards and criteria. No Listing Fees: Coinbase is renowned for not charging listing or application fees to asset issuers, making it more accessible for new or smaller projects to enter the market. No Marketing Fees: Unlike many exchanges, Coinbase does not require issuers to pay marketing fees or mandate the use of their services.The Process of Listing a Coin on Coinbase
The process of listing a coin on Coinbase involves several steps:
Application: Issuers submit an application to list their coin on Coinbase. Review: The application is reviewed for compliance with Coinbase's standards and regulations. Technical Verification: The coin undergoes technical verification to ensure it meets Coinbase's security and performance requirements. User Interface: Once approved, the coin is added to Coinbase's platform, where users can trade it.Observing the Immediate Impact: New Coin Excitement
The immediate impact of a new coin being listed on Coinbase is often a period of excitement among investors. Newly listed coins typically experience a surge in price due to the heightened interest they receive. This excitement often reaches a peak, but then the price usually drops over time as investors start to reevaluate the underlying value of the coin.
A Case Study: SAND-USD
Take, for example, the case of Immutable Xrsquo;s SAND-USD token. As of the writing of this article, SAND-USD has just been added to Coinbase's new pairs column and is visible as a menu option, although it is not yet functional for trading. Once activated, you will be able to observe the immediate impact on the token's price and trading activity.
Activation and the Order Book
Watch as the SAND-USD token is activated on Coinbase. The activation process might be automated with a timer or manually updated by Coinbase. Regardless, the moment the listing is turned on, you can see the changes in the order book and the price of the token. It is an interesting ldquo;surfboard riderdquo; to observe how a newly activated asset performs in a few minutes or hours after listing.
Conclusion
For anyone looking to understand the nuances of crypto market trading, observation is key. Spend some time monitoring charts, the order book, and the performance of newly listed tokens. Understanding how these elements interact can help you make more informed decisions in the ever-evolving world of cryptocurrencies.