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Coinbase introduces three trading signals

Posted: 18 July 2019 3:35 pm
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Ever wondered whether more top holders on Coinbase are buying or selling at a given time?

Coinbase has introduced a new system of trading signals to give users a simple way of potentially gauging current sentiment among other Coinbase users, it announced.

It's a sign

The three signals are:

  • Top holder activity
  • Typical hold time and popularity
  • Price correlation
Top holder activity

This signal simply shows a buy percentage and a sell percentage. It tells you whether the top holders of a given asset on Coinbase have been buying or selling in the last 24 hours.

The top holders include the top 10% of owners. If they've reduced their position in that asset in the last 24 hours, they're on the sell percentage. If they've increased their position, they're on the buy side. It's updated every 2 hours.

Typical hold time and popularity

This indicator shows the median number of days an asset stays in a Coinbase customer's account before it's sold or moved to another address or wallet. Meanwhile, popularity is a simple ranking, based on how many Coinbase customers hold a certain asset.

These signals are updated every 24 hours.

Price correlation

This measures how cryptocurrency prices have moved in relation to each other, updated every 24 hours.

Correlation will be expressed as a percentage. 100% would be when two coins have moved in an identical way, 0% would be when there's no correlation between them, and -100% would be when two coins move perfectly opposite each other.

Given the tendency of crypto markets to move in tandem, it could be a nice and easy way to quickly highlight the coins that are going a different way.

Worth noting

It's interesting to note that in some cases, it would be relatively inexpensive for someone to manipulate the top holder activity indicator on Coinbase's smaller markets.

For example, Augur has a $180 million market cap, the majority of which is almost certainly ensconced outside of Coinbase. Meanwhile, its total 24-hour trade volume is some US$5.5 million at the time of writing, according to CoinMarketCap – which almost certainly includes some fake volume.

Given the amount of money that sometimes gets thrown around for apparently recreational crypto market manipulation, it seems possible that someone will eventually start exploring how easy or difficult it is to bend that top holder activity metric to their will. And in the case of some assets, they might find it surprisingly easy.



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Disclosure: The author holds BNB and BTC at the time of writing.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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