Stellar's XLM Surges as XRP Rebounds, But Gains May Be Temporary

Stellar Lumens (XLM) emerged as one of the top-performing cryptocurrencies on December 17, rallying alongside Ripple’s XRP. XLM’s price surged by 10% during the day, reaching an intraday high of $0.4713, marking a 32% recovery from its monthly low.

The upward momentum coincided with a broader rally in XRP, fueled by Ripple Labs’ announcement of the RLUSD stablecoin. The newly launched stablecoin is expected to attract significant inflows and challenge Tether’s dominance in the market.

Ripple and Stellar: A Shared Legacy and Similar Goals

Stellar and Ripple often exhibit correlated price movements due to their shared history and similar objectives. Jed McCaleb, the founder of Stellar, was one of the original team members behind Ripple Labs.

While Ripple primarily targets institutional clients such as banks and money transfer services, Stellar focuses on enabling peer-to-peer cash transfers. This shared focus on facilitating payments often ties their market trajectories.

For instance, Stellar reached its yearly high of $0.1963 in July 2023 after Ripple secured a legal victory against the Securities and Exchange Commission (SEC). Similarly, XLM saw a massive 500% surge in November following Donald Trump’s election victory, which raised expectations of SEC policy changes under incoming leadership.

Bitcoin’s Rally Boosts Altcoins

XLM’s recent gains also align with Bitcoin’s strong performance. Bitcoin surpassed the critical resistance level of $107,000 for the first time, igniting a broader rally in altcoins. Historically, Stellar and other altcoins tend to benefit from Bitcoin’s upward momentum.

Strong Network Fundamentals Support XLM

Beyond market trends, Stellar has demonstrated robust fundamentals. The latest network report reveals that the number of active addresses on Stellar’s blockchain has grown to over 9 million, while the total transaction volume surged to $4.9 billion.

These indicators highlight Stellar’s growing adoption and utility, providing additional support for its recent price movements.

Stellar Price Analysis and Outlook

From a technical perspective, XLM recently rebounded from its monthly low of $0.3535, forming a hammer candlestick pattern—a widely recognized signal for potential reversals.

The price remains above both the 50-day and 100-day moving averages, further supporting a bullish outlook. Additionally, XLM has formed a bullish engulfing pattern, characterized by a strong green candle completely covering the preceding red candle.

Given these signals, XLM could continue its upward trajectory, targeting the next resistance level at $0.50, representing a 12% potential gain from current levels.

Risks to the Rally

Despite the optimism, there are risks of a potential pullback. XLM’s chart hints at the formation of a bearish flag pattern, which could lead to a reversal and push the price back to retest its support at $0.3535.

While Stellar’s fundamentals and market dynamics remain strong, traders should exercise caution and monitor key support and resistance levels in the days ahead.

Conclusion

Stellar’s price rally reflects both its strong fundamentals and the broader market recovery driven by Ripple’s developments and Bitcoin’s performance. However, technical indicators suggest that gains may be capped if bearish patterns materialize.

As the cryptocurrency market evolves, Stellar’s growing adoption and strategic focus on peer-to-peer transactions position it as a significant player in the digital economy. For now, the XLM price movement will likely depend on broader market trends and investor sentiment.