Coinbase is rolling out new tools to help entry-level crypto users understand what seasoned traders are up to.
The exchange announced Wednesday the availability of a new suite of signaling tools. One such tool broadcasts the activity of Coinbase’s top traders.
“The top holder activity signal is the percentage of Coinbase customers with large balances of an asset (top 10%) who have net increased (bought) or decreased (sold) their positions in that asset through trading over the last 24 hours,” an official Coinbase blog post explained. “This is updated approximately every 2 hours.”
Speaking to CoinDesk, a Coinbase spokesperson further detailed that top holder activity would be aggregated from all individual Coinbase accounts across the exchange – excluding those set up by institutions.
Beyond sharing metrics on Coinbase power users, the San Francisco-based company is rolling out other data tools to help retail users make more informed decisions.
Coinbase customers will also be able see the median number of days an asset is held by traders on the exchange before being sold or moved to another address. Another tool gauges the popularity of assets on Coinbase, as well as relative price correlations to other crypto assets.
All these “exclusive” data tools are available to any user for free starting today, according to Coinbase.
Speaking to the goals behind adding the new tools, a Coinbase spokesperson told CoinDesk:
“For individual investors, especially those new to crypto, we hope these new signals will encourage more informed management of a diversified crypto portfolio. We want trading signals to help first-time investors build the right portfolio to suit their investment goals.”
Having done some early analysis with these tools, Coinbase senior engineer Will Drevo says Coinbase’s top crypto accounts have a tendency to buy rather than sell their portfolio positions.
In another blog post, Drevo wrote:
“Historically, when top holders are either unusually bullish or bearish this has been indicative of changing market conditions, but not always.”
In sum, leveraging a strictly signal-based investment strategy, Drevo writes, is not always beneficial to traders and should not be taken directly as investment strategy or advice. Rather, users are encouraged “to create and manage their own crypto strategy” based on a user’s own needs, financial means and risk tolerance.
“If in doubt, consider consulting a financial professional,” Drevo writes.
Founded in 2012, Coinbase snagged an $8 billion valuation late last year after raising $300 million in venture capital. As reported last week, the exchange may soon set up its own insurance company with the help of brokerage Aon.
Coinbase CEO Brian Armstrong via CoinDesk archives