Coinbase, the US digital asset exchange, has launched a controversial tool that can help entry-level digital asset investors understand what experienced traders are doing.
On Wednesday, the exchange announced a new set of signaling tools that would monitor and broadcast the activities of Coinbase's top traders.
Coinbase explained in its official blog post:
- Coinbase does not support Lightning Network, the company has done it for it.
- Heavy Coinbase plans to launch the IEO platform, while waiting for the opportunity to launch STO products
- The relationship between Barclays Bank and Coinbase is over! The user may be a little troublesome
- Coinbase becomes Tezos' largest verification node, will it be a new trend for exchanges?
- Holding nearly a million BTC, revealing how the giant whale Coinbase manages them
- New crown epidemic hits the United States, CME Group suspends offline trading, Coinbase and other open remote offices
“The top-level holder’s activity signal refers to the information that Coinbase customers who have large asset balances (top 10%) have net increase (purchase) or reduce (sell) their asset positions in the past 24 hours. Updated approximately every 2 hours."
A CoinBase spokesperson further explained in an interview with foreign media CoinDesk that top-level holders are limited to individuals, not institutions.
In addition, CoinBase calculates two additional data points: (1) average holding time (2) popularity of each asset. With these two features, CoinBase relies on the entire Coinbase user base, which tells you how long people will stay before selling or sending a particular asset to another address.
Unfortunately, when you transfer assets to a hardware wallet or a secure wallet, Coinbase will assume that you are no longer "holding" the asset because it is no longer in your Coinbase account.
Finally, Coinbase looks at the price data to determine if the prices of multiple assets are relevant. For example, if the X-coin's correlation with Y is 0%, it means that they will move up and down in parallel. A negative correlation means that the two assets move in the opposite direction. This feature helps investors build a more balanced cryptocurrency portfolio.
Questioning voice: Is CoinBase going to big business?
For the auxiliary tools provided by CoinBase, industry insider Kyle Samani commented:
“Can someone explain this to me? I really don’t understand that my direct response is that this will encourage whales to transfer their assets to other places.
Why trust an exchange (although aggregated) that provides your information to other traders? . ”
In response to this question, Coinbase senior engineer Will Drevo explained that Coinbase's top account holders have a tendency to buy rather than sell investors' portfolio positions. He wrote in a blog post:
“Historically, when top-level holders are unusually bullish or bearish, this suggests that market conditions are changing, but not always.”
Drevo believes that the use of this information is not always beneficial to traders, nor should it be directly considered as an investment strategy or recommendation. Instead, it encourages users to create and manage their own investment strategies based on their needs, financial situation and risk tolerance.
Editor's comment: The original intention of Coinbase is to attract new users and increase the user's stickiness by launching this set of auxiliary tools. However, it is obviously not good for large users to announce the information of large positions. Fortunately, this information is not released in real time. But set a 2 hour interval (compared to CME is updated every week), otherwise the big household does not mention the money to go to the talent, and this time difference means that once the big business has a trading tendency, it may Fast operation will increase market volatility to a certain extent. It's worth pondering that Coinbase said it didn't monitor the institutional account, but only monitored the personal account, and this decision seems to provoke more debate.