Analysis: Coinbase influences cryptocurrency returns, most coins underperform BTC and ETH over time, and VC-backed coins give the worst returns of all
Note: This is not investment advice and my investment disclosures are below. — Special thanks to my Ali Khan for running the scripts to grab and analyze pricing data. Tweets: @balajis , @jack , @ludimagistr , @francispouliot_ , @balajis , @thestalwart , @jasonplowery , @sullof , @theinstagibbs , @laurashin , @dalmaer , @fchollet , @carnage4life , @mslopatto , @faktastic11 , and @fredbenenson Tweets: Balaji Srinivasan / @balajis : 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! https://twitter.com/... https://twitter.com/... @jack : pop! https://startupsandecon.substack.com/ ... Aaron S / @ludimagistr : 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 https://twitter.com/... @francispouliot_ : 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.substack.com/ ... Balaji Srinivasan / @balajis : 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. Joe Weisenthal / @thestalwart : 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/ ... Jason Lowery / @jasonplowery : 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/... Francesco Sullo / @sullof : 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://twitter.com/... @theinstagibbs : 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/... Laura Shin / @laurashin : “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 https://twitter.com/... Dion Almaer / @dalmaer : “Once a coin has been on Coinbase for a year, it appears to lag Bitcoin and Ethereum pretty soundly.” https://startupsandecon.substack.com/ ... @fchollet : “a negative-sum game rigged for the benefit of insiders” https://twitter.com/... @carnage4life : 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.substack.com/ ... Elizabeth Lopatto / @mslopatto : “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/ ... @faktastic11 : 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.substack.com/ ... @fredbenenson : “...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.com/ ...
Context & Ripple Effects
This analysis lands at an awkward moment for Coinbase: the exchange had just reported a blowout quarter — $2.5B in Q4 revenue and $840M net income — after years of building toward crypto-native institutions rather than Wall Street, per its earlier institutional pivot away from Goldman Sachs-type firms. The claim that Coinbase itself influences which assets win turns that distribution power into a returns story.
The finding that VC-backed coins are the worst performers cuts against the fundraising pitch that carried hundreds of tokens to market through exactly this kind of exchange channel. By April, the public-market side had turned too, with Coinbase down roughly 40% year-to-date alongside Marathon Digital and Riot Blockchain.
First-order effects
- Investors holding broad altcoin portfolios learn their diversification has been a drag: per the analysis, the median coin trails BTC and ETH over time, so index-style token exposure systematically underperforms simply holding the two majors.
- Coinbase's listing decisions become a measurable return factor — assets it touches behave differently, giving the exchange de facto pricing power over which projects attract capital.
Second-order effects
- VC-backed token issuers face a credibility problem: if their coins are the worst performers, funds can no longer sell exchange listings as validation, forcing them toward alternative distribution or longer lockups.
- Rival exchanges can attack Coinbase by positioning listing neutrality as a product feature, since the analysis implies its curation is neither neutral nor reliably value-adding for buyers.
Third-order effects
- If the pattern holds, the market structurally consolidates around BTC and ETH as the only durable store-of-value assets, shrinking the investable altcoin universe and squeezing the token-issuance business model that funded much of the last cycle.
- Exchange gatekeeping of asset performance invites scrutiny — from regulators and from crypto-native critics alike — of whether listing venues should hold this much influence over returns, feeding the broader legitimacy debate about who captures value in crypto markets.
The trend: Crypto returns are concentrating in BTC and ETH while exchange-mediated token issuance — especially VC-backed coins — faces a mounting legitimacy test as both a returns strategy and a business model.