Coinbase effect could disappear after STEPN pump and dump, exchange outlines plan of action
- Coinbase listings are known to push altcoin prices higher, offering double-digit gains within hours of listing.
- STEPN, a move-to-earn lifestyle token witnessed a massive price hike after its Coinbase listing before 10% drop.
- Coinbase outlines a detailed plan to remove information asymmetries and avoid guesses in new token listings on its exchange.
One of the world’s largest cryptocurrency exchanges, Coinbase revealed plans to take steps to get rid of information asymmetries that allow users to guess altcoins getting listed on the exchange.
Coinbase addresses how listing info is released after STEPN rally
STEPN, the native token of the move-to-earn lifestyle hit a new all-time high after its Coinbase listing. STEPN price hit $4.11 and has plummeted nearly 10% since then. The “Coinbase Effect” is popular among traders in the crypto ecosystem; an altcoin listing pushes the price higher, with double-digit gains.
The leading crypto exchange has addressed concerns about the possibility of traders front-running tokens and outlined a detailed plan to address information asymmetry. Coinbase has acknowledged the impact on a token’s price after news of its listing breaks out.
In a blog post, Brian Armstrong, the CEO of Coinbase revealed new procedures that are being implemented so people wouldn’t be able to guess which cryptocurrency will be listed next or if the exchange is considering a new listing.
An update on our asset listing processes.
— Coinbase (@coinbase) April 28, 2022
We review assets as thoroughly and quickly as possible, listing everything we can safely and legally list.
There's always more we can do to improve our asset listing process. Read more here: https://t.co/pEAeHk9JGr
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Armstrong was quoted as saying:
While this is public data, it isn’t data that all customers can easily access, so we strive to remove these information asymmetries.
The exchange has been the subject of speculation in the crypto community and faced insider trading charges in the past, in 2018. Therefore, measures taken by Coinbase would help the exchange monitor insider trading, and information leaks from within the platform. Armstrong is ready to use external blockchain forensics to trace transactions from employees.
Coinbase’s new measures are likely to prevent the pump and dump events that follow listing speculation or the actual listing on the exchange, in the future.
Author
Ekta Mourya
FXStreet
Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.
