Stellar (XLM) has recently made headlines with a massive price increase of over 50%. This sudden and impressive rally has investors and market observers wondering: Is this just a temporary hype, or is it a sign of a more sustained uptrend for Stellar and the altcoin market? The trigger for this price pump was Ripple’s recent victory against the SEC, where it was declared that XRP, Ripple’s proprietary cryptocurrency, is not a security. This historic decision has had a bullish effect on the altcoin market, with Stellar leading the way.
Stellar (XLM) mirrors the trend of XRP
To understand why Stellar has been so positively impacted by Ripple’s win, it’s crucial to understand the relationship between the two. Stellar was founded by Jed McCaleb, a co-founder of Ripple.
The decision not only justified Ripple, but also indirectly validated Stellar’s operating model. The ruling has allayed concerns about possible regulatory action against similar platforms, leading to increased investor confidence and an increase in the price of Stellar.
The effect of the SEC’s defeat is that it opens the door for more entities in the financial services industry to embrace Stellar’s technology for facilitating payments. MoneyGram, the international payment service provider, is currently the most notable company using Stellar. Other companies such as Circle, Coinme, Abra, Anchorage, and Binance are also on the list.
At the same time, Stellar is aiming for a fully decentralized ecosystem through its Soroban project. Soroban, a Rust-based smart contracts platform, is designed for scalability. Developers can use this network to create dApps with practical, real-world uses. However, the hurdle lies in the fact that the ecosystem has not yet gained significant momentum among developers.
What’s next for the XLM price?
From a technical perspective, XLM has the potential to challenge the significant $0.2 mark in the coming days, although its ability to sustain a rally past this point seems limited at the moment. At the time of writing, XLM price is trading at $0.14, up more than 30% in the past 24 hours.
The price of XLM witnessed minor selling pressure near the high of $0.1977 and fell slightly, suggesting bulls are locking gains at higher levels.
In addition, the weekly relative strength index (RSI) for XLM has entered overbought territory, raising the likelihood of a further downward correction.
In the event of a pullback, the XLM price could risk falling into an immediate downward channel around USD 0.1, representing a drop of around 50% from its current price level.
Other potential price points include the token’s 20-week exponential moving average of around $0.097, which could emerge if XLM faces a heavy sell-off. However, this case is a distant dream for now.
An upside wave may strengthen if XLM price crosses the crucial $0.2 level. Above this level, the price is likely to hit the year’s high at $0.25.