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Coinbase Fails to Predict Demand from Large Investors

Coinbase

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Fredrik Vold

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Fredrik Vold

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Last updated:

June 25, 2023

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The popular US-based fiat-to-crypto exchange Coinbase has decided to shut down its still relatively new Coinbase Index Fund, citing lower-than-expected demand from retail, accredited and institutional investors.

The index fund, which is a weighted basket of digital assets listed on the Coinbase platform, was launched in June this year. However, the fund was only made available to US-based accredited investors with a minimum investment of USD 250,000.

A Coinbase spokesman confirmed in a media statement that the index fund would be formally closed by the end of October. Existing customers will instead be directed to the newly created Coinbase Bundle, an update to the Coinbase platform that lets customers buy digital assets in a weighted basket, but then store, transfer, and trade them separately in their own individual wallets. Unlike the now-closed index fund, Coinbase Bundle is available to anyone with a minimum investment of USD 25.

The closure of the fund may be a sign that demand from institutions and high-net worth individuals is not as high as Coinbase had anticipated earlier. However, it could also be a sign that the market for institutional investing is becoming saturated, at least temporarily.

2018 has seen the number of players in the institutional investment market grow, despite the overall shrinking size of the cryptocurrency market, with large new players like Michael Novogratz’s Galaxy Digital entering the market.

The decision by Coinbase to instead focus its efforts on the Coinbase Bundle appears to be part of a larger trend within the industry right now, with companies like Circle Invest, Bitwise and even Chinese crypto exchanges like OKEx and Huobi all moving into the space.

The news from Coinbase comes shortly after the exchange said it would list the 0x (ZRX) token to Coinbase Pro, the professional platform formerly known as GDAX. According to the exchange, the new listing is the first among many as the company seeks to radically simplify its listing process.