Stellar (XLM) Price Rises as XRP Rebounds, but Gains May Be Brief

Stellar Lumens (XLM) experienced a strong price surge on December 17, making it one of the best-performing cryptocurrencies on that day. The price of XLM rose by 10%, hitting an intraday high of $0.4713, marking a 32% increase from the lowest point it had reached earlier this month. This upward movement in XLM’s price coincided with the continuous rise in XRP’s price, driven by Ripple Labs’ announcement that they would be launching their RLUSD stablecoin. This new stablecoin, which is expected to be launched on major exchanges such as Uphold, Bitstamp, and MoonPay, has stirred significant optimism in the cryptocurrency market.

Ripple Labs has high expectations for RLUSD, believing it will challenge Tether’s dominance in the stablecoin market. The company’s strategic aim is to see the stablecoin attract inflows and become a prominent player, especially within the world of cross-border payments. This development, however, also contributed to the rally in the price of XRP, which often leads to a synchronized rise in Stellar (XLM), since both projects are heavily focused on money transfer solutions.

The two projects are intertwined not only by their shared industry focus but also by their common origin. Jed McCaleb, the founder of Stellar, was once a co-founder of Ripple Labs, and this connection between the two projects has often resulted in them moving in tandem. Stellar’s main goal is to promote peer-to-peer (P2P) transfers of cash, whereas Ripple’s focus is more centered on institutional clients like banks and larger financial entities that facilitate cross-border remittance services. Despite these differences in their focus, the performance of one has often affected the other.

For example, in July 2023, Stellar saw a significant rally, hitting a yearly high of $0.1963, when Ripple Labs won a major legal battle against the U.S. Securities and Exchange Commission (SEC). Similarly, in November 2024, Stellar’s price jumped sharply after the U.S. presidential election, as Donald Trump’s victory led to speculation that the SEC might abandon its legal appeal against Ripple Labs. The combination of these events created a bullish sentiment in the market that extended to Stellar as well.

Moreover, Stellar’s rally was further supported by the broader cryptocurrency market conditions. Bitcoin’s ongoing strength, as it reached new record highs surpassing $107,000, also had a positive impact on altcoins like Stellar. Historically, when Bitcoin performs well, altcoins tend to follow suit, and Stellar is no exception. As Bitcoin gained momentum, so did the demand for other cryptocurrencies, including Stellar.

Apart from its price movements, Stellar is also demonstrating strong underlying fundamentals, which could further contribute to its growth. According to the most recent report, the number of active addresses on the Stellar network has grown to over 9 million. Additionally, the total transaction volume within the Stellar ecosystem has surged to $4.9 billion, reflecting the increasing adoption and use of the network for various decentralized finance (DeFi) applications and cross-border transactions.

Looking at the technical indicators, the daily chart for XLM shows that the price bottomed at $0.3535 earlier in December, after which it formed a hammer pattern, a common reversal signal. The hammer pattern suggests that a trend reversal is underway, indicating that the bullish sentiment may continue in the near term. Moreover, Stellar has remained above its 50-day and 100-day moving averages, which are positive indicators for the price.

Stellar has also formed a bullish engulfing chart pattern, which is characterized by a large bullish candle that completely covers the previous smaller red candle. This type of chart formation typically signals strong buying interest and suggests that the price could continue to rise.

Based on the current chart setup and the positive sentiment surrounding Stellar, it’s likely that the coin will continue to see upward movement, with bulls targeting the next resistance level at $0.50. This level represents a potential 12% gain from the current price of $0.4713. However, despite the optimistic outlook, there are still risks involved. One of the main concerns is the formation of a bearish flag pattern on the chart, which could indicate a consolidation phase before the price reverses direction. If this bearish pattern materializes, Stellar could face a retracement and test the support level at $0.3535, which could lead to a short-term correction.

In summary, Stellar’s price surge can be attributed to a combination of Ripple’s positive developments, strong market sentiment, and the growing fundamentals of the Stellar network. While the outlook remains bullish in the short term, it’s important to remain cautious, as there are technical risks that could lead to a potential pullback. Traders and investors should closely monitor the price action and be prepared for possible market corrections in the coming days.