Did Ripple (XRP) And Stellar (XLM) Inclusions Into Coinbase Prove The ‘Coinbase Effect’ Is No More?
After Recent Coinbase Listing Fails To Jump In Price, Users Speculate The End Of The “Coinbase Effect”
The Coinbase Effect is a phenomenon that many people have used to describe the impact on a coin when Coinbase Pro lists it. Though there has been some debate regarding the stimulus for the rise in price, varying between insider trading and the increased interest when Coinbase adds the token, the effect is clear. Whenever Coinbase Pro makes an announcement or suggests that they will add a particular token, it hardly takes a few minutes before the value of the digital asset jumps by a double-digit percentage.
The most recent listing that Coinbase Pro announced was that of Stellar (XLM). Only a few days ago, the company announced that the XLM token would be coming to the platform, which got a positive reaction from the markets, increasing the price by 4%. However, this is hardly the drastic increase that the market usually sees with this addition. Even when XRP was added recently, it only saw a 7% jump, rather than the 15% to 20% that a lot of these coins surge by. Could this be a sign that the effect is over, or is it just proof that all of the other coins were boosted by market manipulation?
This Coinbase Effect appeared to be in full swing back in December 2017, when the platform added Bitcoin Cash. Within a matter of a day, the token when from $2240 to $4330, an increase of around 93%. This is the event that many believe started the “Coinbase Effect” that many people know today. To get the benefits of this effect now, it does not even look like the coin has to be actually listed.
Take a look at XRP. Even though it was only added not long before XLM, the market speculated that it could be associated with Coinbase after seeing significant success in the market in January last year. At the suggestion alone, the token jumped to $3.80 per coin, which quickly faded when Coinbase did not add the token. However, now that Coinbase has added the token, it is only priced at just over 30 cents each, adding further fuel to the fire that the Coinbase Effect could be a thing of the past now.
With the XLM addition, the company and many investors believed that the price would jump significantly. Official trading is scheduled for this morning, and the surge in price is usually already happening by now, but that has yet to be the case. If anything, this lack of activity at least shows that Coinbase does not have the power it used to have, which could be attributed to the bear market, investor FOMO, or many other reasons.
The crypto winter has been increasingly damaging to the market at so many levels, taking down investors, miners, mining farms, and even whole exchanges. If the lack of excitement over two of the most popular cryptocurrencies is any indication of Coinbase’s new effect, it could mean that investors are maturing past pure speculation via exchanges. After all, at the time of writing, the XLM token is sitting at $0.107520, and has actually dropped by 0.35% in the last 24 hours.