With today’s surprise announcement from Coinbase adding Stellar XLM – and the disappointing price movement that followed – it is more evident that the “Coinbase effect” has been removed from the market.
In December 2017, the price of Bitcoin Cash soared from $ 2,240 to $ 4,330 in 24 hours, a 93 percent increase over the course of the day. While some of that price movement occurred before it was officially listed on Coinbase – which led to the exchange being accused of insider trading – most of the appreciation in value of BCH took place after it was listed on Coinbase.
The end result was the beginning of the “Coinbase Effect,” where cryptocurrency investors looked to the power of the popular cryptocurrency exchange to create a significant surge in the price of new coins. In the weeks following the BCH listing, XRP also benefited from an association with Coinbase. While the coin caught fire in the first weeks of January 2018, when the crypto markets saw their most bullish period in history, much of investor interest was driven in anticipation of a Coinbase listing. XRP jumped to $ 3.80 per coin, despite having a maximum offer of 100 billion, and Ripple’s founder Jeb McCaleb jumped from Amazon to become one of the richest men in the world just before Jeff Bezos.
However, Coinbase was dispelling rumors of an XRP expansion at this point, and the currency’s price reacted by falling with the rest of the market during the 2018 bear cycle. Even with the last listing on Coinbase at the end of February 2019, the price increase was nowhere near what investors would have expected a year ago. The price of XRP rose no more than 7 percent on the day it was listed on Coinbase, with most of its profits being lost over the next few days.
As previously reported by EWN, Coinbase surprisingly added Stellar XLM to its exchange today, with official trading scheduled to start in the early hours of March 15th predicted The listing should take place soon, Coinbase’s connection to Stellar XLM has been in circulation since last July when the exchange announced it was considering multiple currencies – including XLM – to add to its platform.
However, price movement for Stellar XLM since the announcement has been less than lackluster. XLM has managed to lower the price in the past 24 hours, with the currency generating almost no investor interest in the hours following the announcement.
It is possible that the bulk of the investment funds were received in Stellar prior to the Coinbase announcement, but the reality is a sharp decline in the influence of the cryptocurrency exchanges influencing the price of coins. While Coinbase may have had the power to nearly double the price of new coins a year ago, the importance of the impact on the stock market, plus the critical factor of investor FOMO, has waned with the bear market.
Some industry officials have indicated that the ongoing “crypto winter” has wiped out market speculators and short-term investors, leaving that interest in cryptocurrency technology and industry behind. If the addition of XRP and XLM to Coinbase is any indication, we’ve seen a ripening in investor response to pure stock market-driven speculation.