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Stellar Price Analysis

  • Stellar was created in 2014 after Ripple co-founder Jeb McCaleb wanted to create a more community-driven, open source platform focused on financial inclusion
  • Stellar’s native coin, the lumen (XLM), has been on a general downward trend since December 2018, but has seen favorable YTD gains as of August 2020
  • Stellar’s institutional partnerships showcases its robust consensus protocol, which could positively influence XLM’s price potential

Welcome to our brand new Stellar price analysis. Stellar (XLM) is becoming a popular altcoin. At the time of this writing, XLM is trading at $0.08 USD with a market cap of $1,680,021,782 USD, making it rank #17 on CoinMarketCap. While it may not be rubbing shoulders with the likes of Bitcoin and Ethereum, XLM has a sizable fanbase.

If you’re not familiar with this coin, we’ve got you covered. In this article, we’ll dive into Stellar’s history, recent price movements, and its future.

A Humanitarian Effort

Stellar was started in July 2014 by Ripple co-founder, Jeb McCaleb. McCaleb wanted a coin that prioritized an open-source philosophy, thereby making XLM more community-oriented.

Let’s first clarify some terms. Stellar is the name of the company and refers to the network upon which its cryptocurrency, the lumen, is based. XLM is its ticker.

Stellar looks to enhance the fiat financial system, not replace it. People can trade cryptocurrencies like Bitcoin and Ethereum, but Stellar is designed to make traditional forms of money, like the US dollar, more useful and accessible.

How? To make a long story short, Stellar enables people to make a digital representation of national currencies. That might not seem exceptional, but it means that people anywhere in the world can own, buy, and sell the value of a US dollar without having a US bank account.

Therefore, Stellar’s main mission is to help the unbanked; those who are not served by any financial institution.

This humanitarian aspect echoes the Decentralized Finance (DeFi) space, which has been booming recently. As of early September, there is approximately ~$8 billion of total value locked in DeFi projects. Although, there doesn’t seem to be explicit mention of Stellar getting in on the DeFi hype.

Stellar Price Analysis

If Stellar is the network, and that network enables digital representations of fiat currency, then why do they have a native token, the lumen?

Creating the lumen was necessary for Stellar’s ledger system. Users need to have at least 1 lumen in their accounts to keep it open and pay transaction fees, which cost pennies. Without this cost, the Stellar network would risk being spammed and arbitrary. Having a native token also helps users liquidate otherwise illiquid assets. Traders can buy XLM on various exchanges.

XLM’s price has followed the trend of other altcoins. There was a notable spike in December 2017 and has been trending downward ever since. XLM peaked at ~$0.94 on January 4, 2018 and has since been hovering within the $0.05 – $0.15 range. The last time the coin was above $0.15 was in early December 2018.

As of August 5, 2020, Stellar’s YTD gains cast the coin in a bright light compared to Ripple and Bitcoin. Stellar grew 138%, Ripple grew 62%, and Bitcoin with 58%.

Stellar is often compared to Ripple. Aside from McCaleb’s involvement in both, both cryptocurrencies are designed for quick and affordable sending and receiving of funds, and they share a similar code base.

Still, Ripple was made to appeal to banks and Stellar focuses on financial inclusion, albeit still tailoring to larger institutions. They use different consensus protocols; Ripple uses Proof of Correctness and Stellar uses their unique Stellar Consensus Protocol (SCP). Lastly, Ripple’s XRP is deflationary while Stellar’s Lumen is inflationary.

Stellar’s future

Stellar has garnered strong institutional support from all over the world, including Europe and Africa. One of their most notable partners is IBM, who built a payment system atop the Stellar protocol. Samsung also announced they incorporated XLM into its Keystore blockchain.

Stellar’s comparison to Ripple’s XRP might not hurt in the long-term, either. The two coins typically move in tandem, and XRP is currently trading at ~$0.24 with a market cap of ~$11 billion, ranking at #4 on Coin Market Cap.

Jeb McCaleb, co-founder of Ripple and Stellar

Coupled with the fact that Ripple has grown 20% since the start of 2020, a comparison to XRP might sound good, but the coin has been one of the worst performers of the year. Binance’s Q2 report shows that XRP is the fifth-worst performing coin on its platform. Tether overtook XRP’s #3 ranking on Coin Market Cap.

Stellar’s price is lower, which means that traders could try to capitalize before it’s too late. Capital.com’s short-term forecast pegs XLM’s price at $0.024 by 2020’s end with a continual decline until the end of 2022 ($0.017) when it begins climbing upwards to $0.051 by April 2024. Crypto Ground forecasts the price at $0.1054 in 12 months and $0.7422 in five years.

McCaleb announced partnerships with thirty banks and other projects for the Stellar Network. In similar news, Liverpool is aiming to be the world’s first carbon positive city by the end of 2020, and they’ve partnered with Stellar to reduce the city’s carbon emissions by 40% by 2030.

Stellar clearly has grand visions, and projects of this magnitude validate the capabilities of their protocol. While longer-term forecasts are harder to pinpoint, Stellar has clearly built a strong foundation for growth.

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