How Savvy Crypto Traders Gamed Coinbase's Latest Listing for a 35% Payday

If there's money to be made in the crypto markets, you can bet traders will be the first on the scene.

Data shows prices for ZRX began to surge on other exchanges a few minutes before Coinbase made its official public announcement at 17:00 UTC. But while there were whispers online about the possibility of insider trading, a charge the exchange has denied in the past, there's another explanation that is perhaps more plausible.

Savvy traders may have been simply making use of well-timed trading bots, computer programs that automatically scout technical price charts and exchange APIs to identify actionable and profitable developments.

If traders would like more control over a bot, they can even program their own.

Cryptocurrency trader Johnny Moe explained how such a signal can give a significant advantage, putting them a leg up above traders seeking to place their own bets on exchanges.

In the world of crypto trading bots, it's unlikely Lightningsignals was the only computer program to convey a timely signal, particularly because even a small informational advantage can yield big results in the crypto markets.

As can be seen in the above chart, the price of ZRX/USD began a noticeable increase at 16:56 UTC on the Binance exchange, rising from $0.68 to $0.77 by the time Coinbase Pro made a public announcement at 17:00 UTC. The price was able to record a 13 percent increase in that four-minute span and ultimately reach a 24-hour peak of $0.91 at 17:09 UTC. If a trader was utilizing Lightningsignals or a similar API bot, he or she would have been able to capture as much as 35 percent profit whereas the public would have had to settle for a more modest 18 percent grain, bringing in nearly half the profit.

Still, it's not exactly clear how widespread the use of bots is, or how many traders may have acted on such signals at the time of the 0x listing.

A cryptocurrency trader known by his handle "Cryptohustle" explained he uses the tools for "Market intel," but that he still prefers other trading options.

That said, most traders accept that the bots are part of the market, and that, for the continued future, traders will continue to build strategies, some including the bots such as those that tracked the Coinbase announcement.