Sirwin
Sirwin

Coinbase Pro's IOTX exceeded 3.5x market value before trading pause -- quick look and thoughts


Coinbase Pro's IOTX price briefly exceeded 3.5x its market price Thursday, Nov. 4 before the exchange paused trading on its IOTX-USDT and IOTX-BTC pairs. 

The announcement -- made by Vishal Gupta, Coinbase and Coinbase Pro's Head of Exchange -- came about a day and a half after Coinbase's IOTX-USDT pair market price began diverging from the market. 

IOTX's USDT and BTC pairs remain paused at press time. 

Some thoughts

It's been about six months since I started trading crypto, and I'm still surprised at how divergent market prices can get across major exchanges. 

I first noticed the IOTX-USDT spike Wednesday morning when I checked my Coinbase Pro portfolio, where IOTX supplanted BTC and ETH as my large cap portfolio's most valuable bag. The price had rocketed up over 100 percent. I couldn't believe it, and a few Google searches and some Twitter community input confirmed Coinbase's price had exceeded other markets some hours ago.  

I wanted to get a better idea of how Coinbase's price could diverge so much, so I pulled Coinbase Pro's IOTX-USDT one-hour bin weekly price history using the Coinbase Pro API and compared it to equivalent data pulled from KuCoin's API. I used KuCoin because I've got a working toolset to query the KuCoin API, and its online chart looked consistent with CoinMarketCap's. 

I produced two charts, shown below:

  • The first chart plots Coinbase Pro's and KuCoin's IOTX-USDT pair hourly price vs time for the week. 
  • The second chart plots the ratio of Coinbase Pro's IOTX-USDT pair hourly price to KuCoin's hourly price. 

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Visual inspection of the two price data traces yields some observations:

  • Coinbase Pro and KuCoin shared consistent IOTX-USDT pair prices until 0100 Wednesday, Nov. 3 UTC. Coinbase Pro's price bumped higher by about 25 percent within an hour, briefly corrected to the market value by 1200 Wednesday UTC before it took off again. 
  • Both Coinbase Pro and KuCoin registered an increase in IOTX-USDT pair values, however KuCoin began its increase about six or seven hours after Coinbase Pro. 
  • Coinbase Pro's IOTX-USDT pair price continued to grow faster than KuCoin's price for over a full day. The disparity eventually exceeded 3.5x before Coinbase Pro paused trading. 

I took advantage of the price disparity and sold my IOTX while the price was somewhere around 2.0x. I plan to buy back in whenever Coinbase Pro's price reflects the market's price. 

Why did this happen? 

Instead of trying to summarize what happened (and failing miserably), I'll just display Vishal Gupta's Twitter explanation below. 

Final thoughts

I've still got a lot of questions on the chart behaviors discussed above. I'm especially curious if there's an explanation for why Coinbase Pro's initial IOTX-USDT pair price jump was mimicked several hours later by KuCoin (and presumbly the market). 

One thing's for sure though -- amateur traders like myself need to make checking coin prices across multiple exchanges common practice. I was lucky I identified the price disparity and was in a financial position where I could sell my IOTX bag at a premium. But as we saw most recently with SHIB's Coinbase listing early September, its just as easy to purchase coin initially thinking we scored a deal, only to have the price tank. 

A note to the reader

Life has been very busy and I had to take a break from posting here, but things have settled down enough for me to start writing again. I've got some good content I want to publish soon. I enjoy writing my thoughts and analysis out on publish0x because it helps me stay (somewhat) organized and serves as a way to document things. But I also enjoy sharing things with the wider crypto community, and getting feedback. I'd love to start conversations with y'all in the comments section or via Twitter. 

Thanks for reading! 

Thumbnail photo by Maxim Hopman on Unsplash.

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simplyrangel
simplyrangel

Aerospace engineer interested in all things data science and cryptocurrency. Based in Houston, Texas.


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