Coinbase Learns Valuable Lesson From Failed "Bundle"
ABC: Always Be Coinbase
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There was much fanfare when Brian Armstrong’s outfit unveiled the Coinbase Bundle back in September. TechCrunch called it a sign the famous exchange was “shaking things up” and even the market gave a faint $3bn acknowledgement to the announcement.
The Bundle was a market-weighted basket of five cryptocurrencies featured on Coinbase at the time: Bitcoin (BTC), Ether (ETH), Bitcoin Cash (BCH) and Litecoin (LTC), and Ethereum Classic (ETC).
It was intended as a starter-investment for new clients looking to get comprehensive exposure to crypto through some of its large-cap coins. The plan was that as other coins were listed, they would also be featured in the basket.
Following the announcement, little was heard about it. Bitcoin Cash was temporarily removed during the contentious hard fork in November. As crypto markets began to freeze, the exchange jettisoned ETC from the Bundle after the coin suffered a 51 percent attack in early January.
So confident was Coinbase in the new product that it even closed its institutional-orientated index fund in mid-October, and redirected interested investors towards the Bundle.
But now, more than nine months after the initial announcement, the Coinbase Bundle is nowhere to be seen. Since mid-April, it can’t be bought, can’t be sold, and it barely features on the website. The Medium link that outlined the new product now redirects back to the Coinbase homepage.
According to an FAQ published earlier this year, the exchange decided to scrap the Bundle due to poor sales. “Coinbase Bundle purchases have been deprecated,” reads the statement, “as such all assets purchased in the bundle have been redistributed to their respective individual asset wallets.”
A source at Coinbase suggests that sales dried up because of the downturn, but didn’t know whether the exchange would later consider reintroducing the Bundle to new investors. Crypto Briefing reached out to Coinbase for further information, but did not receive a response by the time we went to press.
But Coinbase may be unlikely to bring back the Bundle. Despite TechCrunch’s plaudits, the new product was met with widespread derision by the crypto community. Some users saw the market cap weighting mechanism as “lazy“ and nonsensical, giving minor coins like ETC too much sway over the basket’s performance.
The @coinbase bundle seems like a lazy product. Weighting off current market cap makes little sense. Should just let the buyer decide their weights.
By the way, ETC is 0.8% too high in the current @coinbase bundle. pic.twitter.com/BhlmIBe4gk
— Eric ⌐◨-◨ (@econoar) September 27, 2018
One source who specializes in developing crypto-linked trading products describes the Bundle as “just a way for Coinbase to promote trading products to their captive investor base.” With November’s launch of the Amun Crypto Basket, a secure ETP made up of six crypto assets and tradeable on Switzerland’s SIX Exchange, any hopes that Coinbase could corner the market quickly evaporated.
In part, the Bundle fell victim to a combination of bad timing, as the market practically fell off a cliff a month after launch. However, other ETPs, like Amun, survived relatively unscathed.
With markets rising, scrutiny is increasing against crypto trading products. With the Bundle following the short-lived index fund, Coinbase may be learning that new investors are not quite as naive as they were in 2017.
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