Resourceful Traders Could Have Scored 36% Gains on Coinbase’s 0x Listing
Since the biggest North American cryptocurrency exchange, Coinbase, announced a change in their listing policy, crypto-traders started speculating on which asset is going to get listed next.
And rightfully so, Coinbase, with its $53 million of daily volume, is more than capable of serious market movements and coins/tokens listed on the exchange have seen an impressive price surge.
Coinbase also announced in July that the company is considering Cardano (ADA), Basic Attention Token (BAT), Stellar Lumens (XLM), Zcash (ZEC) and 0x (ZRX) for future listings, but nobody knew the order in which they will add these assets to their trading platform.
As it turns out, Coinbase listed 0x (ZRX) in early October but a few resourceful traders knew before the official announcement.
How did certain traders know before the announcement?
The short answer is that 0x (ZRX) was added to Coinbase’s trading API, which signaled meant that it was listed and soon to be ready for trading.
Coinbase has already been accused of insider trading in the past, but those allegations were never proven. However, looking at 0x charts on October 11th, we can see that ZRX token started its surge before the official announcement took place at 17:00.
Can that be just a coincidence or there is something else at stake?
Since insider trading is an offense with serious repercussions for such a crypto-giant like Coinbase to get involved in, we researched other realistic possibilities.
As can be seen on the chart below, 0x started to surge 5 minutes before the official announcement, and some analysts claimed that certain bots were able to detect a bit earlier that Coinbase has added 0x to their server.
The essence of trading bots
API’s are used by advanced traders and trading algorithms. They allow users to trade automatically using commands within the code in order to execute trades rapidly, based on certain market conditions and many other factors and circumstances.
Some trading bots such as Lighting Signals was one among those bots which detected this Coinbase listing in advance.
Over 15% extra profit
Traders acted on the signal, and prior to the official announcement, recorded a 15% profit in 5 minutes.
Naturally, the announcement brought a second overbuying wave, which pushed the price of the ZRX token to $0.89.
Considering the fact that the rally started at $0.68 mark, those lucky enough to receive the mentioned signal could bring home a hefty 30%+ profit.
A competitive advantage
As presented, these signals can be considered as a significant competitive advantage in the highly volatile cryptocurrency market. Although, they are equally available to everyone.
Crypto trader Johnny Moe perfectly explained the upper hand that bot-users have over other traders:
“By the time a manual trader would see the API addition, and navigate the exchange UI, log in with 2FA, navigate to the trading page for the coin in question, fill an order entry, etc., the price is already moving up from trading bots having made their purchases,”
We can not deduce how many traders actually use trading bots, but it is highly possible that Lightning Signals wasn’t the only one which detected the change on the Coinbase’s server.
Even though a majority of traders accept the fact that bots are a living part of the cryptocurrency market, these occurrences bring the advantage to those using bots comparable to the insider trading.
However, if regulations don’t require that the exchange platform deals with this anomaly, we cannot hold Coinbase legally accountable for unintentionally leaking sensitive information.
Meanwhile, those individuals trading without the assistance of bots can only hope that exchanges will realize that they are morally responsible for preventing such system penetrations in the future.