A Closer Look at Tezos (XTZ) and Its Huge Price Surge After Coinbase’s Announcement

The price of Tezos (XTZ) has surged over 25% since Coinbase announced late on Wednesday (November 6) that it had made its Tezos staking service available to all eligible U.S. users of Coinbase.com. In this article, we take a look at XTZ's most recent price action and how it has traded across various crypto exchanges in the past 24-hour period. 

What is Tezos?

The Tezos white paper says that Tezos is "a generic and self-amending crypto-ledger," and that "Tezos can instantiate any blockchain based ledger." 

Here is some of what Binance Info has to say about Tezos:

  • "Tezos completed one of the largest ICOs of 2017 raising almost $232m in one day."
  • "The consensus algorithm on Tezos is Delegated Proof of Stake (dPoS) which will help with the governance structure of the blockchain."
  • "The decentralised governance of the Tezos blockchain will allow anybody to propose protocol upgrades."

What is Staking?

Here is how Coinbase defines staking:

Staking is the process of actively participating in transaction validation (similar to mining) on a proof-of-stake (PoS) blockchain. On these blockchains, anyone with a minimum-required balance of a specific cryptocurrency can validate transactions and earn Staking rewards.

Coinbase's Previous Experience With Tezos (XTZ)

On 29 March 2019, Coinbase announced Tezos (XTZ) baking (baking is basically staking but only available for validator nodes holding over 10,000 XTZ) for Coinbase Custody's institutional clients.

This is the reason that Coinbase gave for choosing Tezos (XTZ) as its first staking asset:

We chose Tezos as our first staking asset because of its DPOS architecture coupled with high demand from current clients. The Tezos design was thoughtful from the start about protecting delegated funds. The result is that we can keep client assets in segregated cold storage, where they’re never subject to more risk than non-DPOS assets (e.g., BTC).

Then, on 30 July 2019, Coinbase announced that Tezos (XTZ) would soon be listed on Coinbase Pro, Coinbase's crypto trading platform for experienced/professional traders/investors.

Shortly following this news, the XTZ price (versus USD) surged over 20%.

Coinbase's Announcement of Tezos Staking for Eligible U.S. Users

As CryptoGlobe reported previously, around 11:00 Pacific Time or 19:00 UTC on Thursday (November 6), Coinbase sent out the following tweet to tell its users about a new simple way for all eligible U.S.-based users of Coinbase Consumer (Coinbase.com) to earn passive income from their XTZ holdings:

In other words, Tezos staking rewards were no longer reserved for Coinbase's institutional clients that were using its custody service.

Coinbase's blog post explained that currently the estimated return for Tezos staking is around 5%; however, you should be aware that the Tezos network "sets the underlying return rate depending on the number of staking participants."

Here is what being an "eligible" customer means:

  • You have gone through Coinbase's KYC process to get your identity verified.
  • You are a resident of the U.S. (except that residents of the states of New York and Hawaii are not eligible).
  • You must hold a minimum amount of XTZ (currently, this is one XTZ).
  • You must hold your XTZ on Coinbase.com (no staking support on Coinbase Pro).

Recent Price Action of Tezos (XTZ) Including What Happened After Coinbase's Announcement

Now, let's look at how Tezos has been performing recently.

According to CryptoCompare, in the past one month, Tezos (XTZ) has been mostly trading in the range 0$0.80 to $0.95:

XTZ-USD - One Month CC Chart - 7 Nov 2019.jpg

And this is what the 24-hour price chart looks like:

XTZ-USD 24 Hour Chart - 7 Nov 2019.png

It looks we had two XTZ price surges following Coinbase's announcement: one around 19:00 UTC (November 6) that took the price from $0.954 to $1.104 by 20:10 UTC (November 6); and another surge that took the price all the way to $1.619 by around 02:15 UTC (November 7). 

As you can see, since then, the price has return to $1.10 (as of 11:32 UTC on November 7), which is back to where it was last night after the first surge. 

How Tezos (XTZ) Has Been Trading Across Various Crypto Exchanges

Here are some more insights from CryptoCompare into XTZ trading in the past 24-hour period:

CC Tezos Data - Fig 1 - 7 Nov 2019.png      CC Tezos Data - Fig 2 - 7 Nov 2019.png

CC Tezos Data - Fig 3 - 7 Nov 2019.png    CC Tezos Data - Fig 4 - 7 Nov 2019.png

This tells us that, during the past 24-hour period, the XTZ-USD trading pair had a 40% share of all XTZ trading and that just over 86% of all XTZ-USD trading took place on Coinbase.

Featured Image Courtesy of Tezos Foundation