Bitcoin's Integration
Mati Greenspan | Feb 14, 2018 07:21AM ET
The Cryptocurrency world is full of clashes and rivalries but none is quite as prominent as the fight between Ripple Labs and Stellar Lumens.
Both were founded in the city of San Francisco by the same man who founded the infamous Mt. Gox exchange, Mr. Jed McCaleb.
After several ideological disputes with Ripple, Jed left to start Stellar. There's a great in-depth article on observer.com that tells the entire tale.
Steller has been praised by the crypto-community for being less corporate and forecasting January's CPI inflation number to be 0.3% and the Core CPI to be 0.2%.
Of course, if we see any numbers bigger than that it could startle investors and might drive up the US Dollar, which would benefit from larger interest rates.
What about Crypto?
During the announcement, I will personally be watching the crypto-markets for any potential reaction.
In this chart, we can see that there has been a rather tight correlation between Bitcoin and the Dow Jones over the last month.
Of course, we know that both have been rising uncontrollably over the entire course of 2017. However, Bitcoin has already seen a very serious pullback of 71% while the Dow's recent low was only 13% from the peak.
In my view, the crypto pullback has already shaken out a large part of the speculation money and what we have now are more of the hard core holders, most of whom probably wouldn't sell even if we see $1000 again.
Whereas the stock market is still chalk full of speculation money, most of which has been focused on short term gains for far too long.
Any reaction to the CPI print in the crypto markets would be a clear sign that liquidity in this new market is rising and that old-school investors are starting to get onboard.
Stellar has a slightly more complex system that includes a built-in inflation metric and has regular auctions and giveaways
When it comes down to it, the success of both projects will depend largely on their adoption by bigger financial firms. Stellar is gaining momentum in this regard and as of October is involved in a deal with IBM (NYSE:IBM) to improve the global payments system.
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As an investor, we can't really know exactly how the future will play out, which is why it pays to diversify your portfolio, not only with different cryptocurrencies but with all types of assets for long-term growth.
eToro is very proud to add Stellar Lumens as the 8th cryptocurrency on the world's number one social trading network.
@MatiGreenspan
eToro, Senior Market Analyst
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