Cryptocurrency exchanges are going through an evolutionary phase. Adding new coins, hiring additional staff, and reviewing existing listings are all part of the bigger picture. For Coinbase, however, their index trading product is on the verge of getting axed. The product is not living up to expectations at this time.
A Failed Experiment by Coinbase
Not every product linked to cryptocurrencies will be successful. Attracting investors, especially the institutional variety, is still an ongoing struggle. Coinbase has tried its hand at catering to this particular crowd. Their index trading product is designed for accredited investors. Despite launching it with great fanfare, it has not met company expectations at this time.
Coinbase’s index fund was first introduced in March of 2018. This market-value-weighted product offers immediate exposure to currencies listed on the platform. Given the strong demand by investors prior to the launch, everyone had high hopes for this new venture. It seems that the expected interest was overestimated quite a bit. Seven months later, the product will cease to exist completely.
Because of the lackluster interest, the company will focus its resources elsewhere. Enhancing the popular products even further will become a top priority as the exchange shifts focus to retail investors instead. This includes the Coinbase Bundle, which is a convenient way of creating a diversified cryptocurrency portfolio by allowing customers to purchase bundles of five top cryptocurrencies for as low as $25. Given the low payment threshold for this product, it is of great interest to regular consumers.
Growing Competition Shows Market Demand Persists
Even though Coinbase’s index fund is scrapped, other providers are launching similar products. Entities such as Bitwise Asset Management, Abra, and Galaxy Digital all offer similar exposure. This seems to confirm institutional investors are still intent on being exposed to the various top cryptocurrencies.
Coinbase has always been a consumer-oriented exchange, first and foremost. Their desire to cater to institutional traders is not paying off in this instance, which is not the end of the world. Not every exchange can do everything right for all kinds of users. Gemini is a very popular institutional-oriented platform, yet gains no real support from retail consumers. Focusing on one aspect and doing that to the best of one’s ability will usually yield the best results.
The bearish trend affecting cryptocurrency in 2018 isn’t helping matters much either. Overall interest in Bitcoin and altcoins appears to be in a slump. This also affects institutional-grade products, which is only normal. Despite this development, the company is still actively hiring new staffers. Setbacks are part of the growing pains cryptocurrency is going through, and such circumstances also apply to service providers active in this nascent industry.
Do you think Coinbase is doing the right thing by turning their attention to retail investors? Let us know in the comments below.
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