Analysis: Coinbase influences cryptocurrency returns, most coins underperform BTC and ETH over time, and VC-backed coins give the worst returns of all
startups and econFais Khan
Context & Ripple Effects
This analysis lands against the backdrop of Coinbase's expanding footprint on both sides of the market: as an exchange whose listings shape what retail can buy, and as an investor through Coinbase Ventures' 150-plus seed-stage bets — mostly $50K–$250K checks written with no full-time staff. The finding that VC-backed coins perform worst directly implicates that low-touch portfolio approach.
The timing matters in both directions: the analysis ran just before Coinbase's record $2.5B Q4 with 11.4M monthly transacting users, and months before the 2022 selloff left COIN down roughly 40% year-to-date alongside Marathon Digital and Riot Blockchain — a stretch in which the long-tail coins this study flags would have had even less cushion than BTC or ETH.
First-order effects
Holders of small-cap and altcoin positions are the immediate losers: the data says the median coin trails BTC and ETH over time, so passive diversification across tokens has been value-destructive rather than risk-spreading.
Coinbase's own behavior becomes a priced return factor — its listing and venture decisions move markets, giving the exchange measurable influence over which tokens appreciate.
Second-order effects
Venture firms holding token portfolios face markdown pressure and harder fundraising pitches if 'VC-backed' is now a documented negative signal rather than a quality stamp.
Token issuers have a new incentive to compete for major-exchange listings, since distribution through Coinbase-style venues is shown to correlate with returns — shifting bargaining power toward exchanges.
Third-order effects
If the pattern holds, crypto capital consolidates around BTC and ETH as the default assets, thinning liquidity and survival odds for the long tail of tokens.
The exchange's dual role as trading venue and early investor becomes a structural conflict-of-interest question for the industry, since the same actor influences both supply (listings) and demand (retail flow) for the assets it backs.
The trend:Cryptocurrency returns are concentrating in Bitcoin and Ethereum while exchange-influenced and VC-backed tokens systematically lag, making asset selection — not diversification — the dominant variable.
Bad post. Assuming the numbers are even accurate... - The 95 assets listed in '21 beat BTC by 58.7% & ETH by 37.9% - The full portfolio beat BTC & ETH too - All made money in USD terms - But there are *windows* where a *subset* underperforms BTC & ETH Conclusion: conspiracy! http…
Such an important article to grok. Retail ability to invest in the most important financial technology in modern era being diluted by VCs/exchanges. Really sad that this is what the supposed “innovators” r doing. Destroying capital in zero sum fashion, the antipode of tech ethos …
It's nice when someone takes the to e to prove that the Bitcoin Maximalists we're right all along. Ultimately, it boils down to this: “Dude, we know the shitcoin is a scam, okay? Stop trying to convince us. We just hope to dump it on someone else quick.” https://startupsandecon.s…
This post is Brandolini's law incarnate. If an exchange lists VC-backed assets early, they're accused of favoritism. If they list them late, they're accused of “dumping on retail”. No win scenario. Real solution: allow public crowdsales to eliminate SEC-driven centralization.
Long story short, the crypto community prefers grassroots movements. DeFi projects that are heavily backed by TradFi VCs are underperforming. From people - to the people, that's the name of the game. https://twitter.com/...
this was an interesting read based on recent performance, the price maximizing strategy for a token project or protocol might be to: 1. never ship a product (hopium sells) 2. never list on a fiat pair exchange 3. minimize insto VC $$$ https://startupsandecon.substack.com/ ...
Most coins listed on Coinbase underperformed, returns got worse over time, and VC-backed coins did worst of all. Meanwhile coins that nearly listed did even better than the ones that made it, and VC-backed ones didn't show any of the same underperformance. https://startupsandecon…
A Mattermark-level analysis which will surely annoy some VCs “You Don't Own Web3”: A Coinbase Curse and How VCs Sell Crypto to Retail https://startupsandecon.substack.com/ ...
Super fascinating: As a customer of Coinbase you basically would have always done better buying BTC or ETH instead of any other coin they end up listing. https://twitter.com/...
Imagine being remembered as the people who sold fake tickets to the life raft while the Titanic sank. People have memories. They aren't going to forget what's happening right now. You don't want to be on the wrong side of history... https://twitter.com/...
The article is well written but the central thesis fells shortly. If instead of coins he was talking of startups and say that you should distrust any startup backed by VC, everyone would laugh. But that is exactly what he is saying because tokens are the new equity. https://twitt…
“Think of it this way: it's like if Google invested in Goldman (Messari in this case), which then published research reports about Google's work, and then Google ran IPOs of its own investments. And no one has to disclose what they're buying or selling.” @Faktastic11 🔥analysis ht…
Informative analysis that shows most altcoins listed on Coinbase underperform $ETH & $BTC over time. Theory is that before listing on Coinbase they're mostly held by insiders who then dump their coins on retail investors over time depressing the price. https://startupsandecon.sub…
“So I started to dig in, and what I found surprised me: most coins underperformed, returns got worse over time, and VC-backed coins did worst of all.” https://startupsandecon.substack.com/ ...
I'm back with my biggest, most important post yet: “Jack Dorsey has been all-in on calling out VCs for profiting from altcoins...what I found surprised me: most coins underperformed BTC, returns got worse over time, and VC-backed coins did worst of all.” https://startupsandecon.s…
“...this is a microcosm of how bad the incentives are in crypto - VCs and private investors that used to have to wait ten years for liquidity can now get it within one... It's a recipe for risk taking that is then quickly passed on to the public.” https://startupsandecon.substack…
Interesting analysis from @Faktastic11 “Once a coin has been on Coinbase for a year, it appears to lag Bitcoin and Ethereum pretty soundly.” https://startupsandecon.substack.com/ ...