After Coinbase was launched last week, the Coinbase effect pushed the price of district0x up by nearly 800%.
The token was one of the largest ICOs in 2017, but its popularity and usage declined in the following months.
At the same time, data shows that this pull effect is temporary.
The listing of Coinbase has awakened the price of an altcoin from its deep sleep. The U.S. exchange suddenly issued an announcement on November 6 to announce the launch of the governance token district0x (DNT), which pushed its price to soar within a few hours and rose by 797% on Tuesday.
The price of DNT surged from $0.0088 the day before Coinbase was launched to $0.079 on November 10. Since then, traders have profit-taking and pushed the price down to $0.062 (for those who have not yet sold, the price increase is still nearly 600%).
DNT is one of the most popular cryptocurrencies in 2017, which allows users to create decentralized markets (or regions). This caused its price to surge to an all-time high of $0.50 in January 2018. The virtual environment is an important part of district0x’s vision-its tokens are required to apply to the “District Registry” to show support or not to support suggestions made by other network participants.
But years of bear market washed away these stories. DNT tokens continue to plummet when there are few platform users and tokens are useless. In May of this year, the price of DNT fell to $0.002. Later, as the DeFi industry began to become a hot field in the encryption industry, its prices rose briefly.
The listing of Coinbase last week did boost DNT prices. This phenomenon is known as the “Coinbase effect” in the crypto industry. Whenever news of Coinbase’s listing is released, the price of altcoins tends to rise immediately. Part of the reason is that the US government has issued strict regulatory and compliance policies, and going online signifies (at least on paper) recognition.
Like District0x, Civic (CVC) and Decentraland (MANA) are also altcoins that fell after the hype in 2017. CVC tokens are used to support digital identities, and MANA is used to support the so-called “virtual reality platform” market. These two tokens were launched on Coinbase together with DNT last week, and they also enjoyed the Coinbase effect.
CVC rose from $0.025 before listing on Coinbase to a high of $0.173 (an increase of 592%), but MANA’s increase after listing on Coinbase to today is relatively small, only 60%-from $0.06 to $0.113 on Tuesday High Point.
This pulling effect is also unlikely to last. A study by the on-chain indicator company Coin Metrics earlier this year showed that the Coinbase effect disappeared within 100 days, with most gains appearing in the first 10 days, and then leveling off to reflect the trend of the “broader” crypto market.
It is expected that by then, crypto traders will chase the next Coinbase pull coin.
