Auto Trading Bots Use ‘Coinbase Effect’ to Take 35% Profit on 0x (ZRX) Listing
Coinbase Proves The “Effect” It Has In Market With 35% Payday For Quick-Thinking Traders
Traders tend to get in early whenever there’s any opportunity to make a profit with cryptocurrency. Last week, Coinbase Pro decided to announce that they’d integrated 0x (ZRX) onto their platform. As soon as traders caught wind of the new addition, it seemed that the “Coinbase effect” seemed to take hold. The token quickly skyrocketed by about 40% within 24 hours.
However, anyone with heavy knowledge of the cryptocurrency industry already knows that this shouldn’t come as much of a surprise. Coinbase is easily the most valuable cryptocurrency exchange by volume, and the millions of users have made it worth approximately $8 billion. However, before the listing went live, Coinbase wasn’t the only one tipped off.
Just minutes before Coinbase decided to make the annoucement, ZRX started to rise in price on other exchanges. Even though insider trading was rumored, which Coinbase as vehemently denied in the past, the more plausible explanation is that traders are employing the use of trading bots, computer programs, and using personal investigation across the industry.
The goal of these traders would be to find profitable changes, using trader bots that would automatically act on any details that they find, either trading or signaling users to do so through social media. The signals themselves cost nothing, but the bots are usually the main expenditure for these tech-savvy traders.
With these bots, traders have the option to either purchase an existing bot or program their own. An experienced programmer would only take a few days to set theirs up. Then, the only thing that they would have to do is setup the buy and sell signals. In this particular launch for the token, it looks like API bots were programmed with sufficient coding that can to take note of the API at Coinbase Pro and see that they’ve integrated a new cryptocurrency.
Trader Johnny Moe believes that having that signal, even minutes head of time, can give someone a major advantage. He said,
“By the time a manual trader would see the API addition, and navigate the exchange UI, login 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.”
Still, with how massively the price changed, it’s clear that there’s no way that the Lightningsignals bot was the only one. Anyone that followed that particular sign had enough time to get a 15% better price than the everyday investors. For all of the bots that could’ve been used, traders basically had a 35% profit margin, while the average trader only had about 18% available to them.
At this time, there’s no actual data on how many potential bots were used. More so, even though a good bot can give a trader an edge over others, the process isn’t exactly easy. One trader, known as “Cryptohustle,” said,
“These bots are just additional intel for me, I haven't built any strategies around them.”
Continuing, Cryptohustle said,
“I don't use bots, because it is not necessary for me to find what I want. I look for projects that have a clear roadmap, achievable goals, leadership and a ‘what tech/industry am I displacing.”
The majority of traders recognize that bots just come with the rest of the market, and traders will continue to come up with ways to stay ahead of the competition. Moe remarked, “There is no ‘insider’ info occurring here.” He added,
“There is just technical wherewithal to access it. Or really, since there are publicly available feeds that share this information, just the social wherewithal to use it.”