Stellar (XLM) is one of the biggest winners of the recent cryptomarket boom, seeing even bigger price gains than Bitcoin and Ethereum. In just a few days or less, XLM’s price has increased by more than 109%. Such an impressive transition has, not surprisingly, piqued the extreme interest of investors and analysts alike. This Ameriprise article lays out what’s fueling this incredible run. This post first benchmarks Stellar’s performance against its layer-1 competitors and then analyzes if this momentum is maintainable.
Factors Fueling Stellar's Ascent
There are a few main reasons that have stoked Stellar’s recent price rally. With booming new trading activity, a perfect storm of sentiment and newly engaged traders. Fifth Era co-founder Anjali Mehra says knowing these drivers is key for investors who want to learn how to cut through the volatile crypto market.
PayPal Integration Rumors and Protocol 23 Upgrade
Together with rumors of PayPal further integrating its PYUSD stablecoin onto the Stellar network, these developments have been the most important catalysts. Even so, the speculation overwhelmed investor optimism, because such a partnership would instantly expand Stellar’s reach and utility drastically. This proposed relocation is not yet a done deal, but the prospect alone has sent the market into a tizzy.
Beyond that, the Protocol 23 upgrade was absolutely key to their success. This upgrade paved the way for smart contract capabilities and allowed for parallel transaction processing, greatly increasing the network’s scalability and transaction speeds. These improvements go a long way towards eliminating serious shortcomings and serving to make Stellar a extra aggressive platform for decentralized purposes (dApps).
Institutional Interest and On-Chain Activity
This growing institutional interest has only boosted Stellar’s credibility and appeal. Franklin Templeton, a behemoth asset manager, has just made big news. Well, they decided to go with Stellar for their U.S. Treasury money tokenizing and that endorsement is indeed especially impressive. FIS’ shift further indicates growing acceptance of Stellar from the traditional finance industry.
Complementing this positive momentum is the record on-chain activity we’ve seen on the Stellar network lately. Today, Stellar powers over $528 million in real-world assets, proving its growing adoption and practical use across industries. This growing ecosystem strengthens Stellar's long-term viability.
Stellar vs. Bitcoin and Ethereum
Stellar’s recent performance is a world apart from what we’re seeing with Bitcoin and Ethereum. While the wider cryptocurrency market has seen upward movement, AscendEX noted that Stellar’s gains have been most extreme.
Outperforming the Giants
Bitcoin’s price has not changed much during the period, staying around $120k. Against this backdrop, Stellar’s 109% price gain makes the case for its exceptional performance during the period. As other leading assets such as Ethereum have lured investors with modest returns of 20% to 50%, Stellar’s explosion is on another level.
This strong outperformance is a sign of a rapidly growing trend among investors. They are even actively looking for other layer-1 solutions that provide distinct benefits, such as Stellar’s speed and low-cost transactions.
Trading Volume and Market Position
Stellar’s trading volume has shot up more than 6000%, topping $3 Billion. This remarkable expansion has launched Stellar deep into the top ten of assets traded by volume. The boom in trading activity has pushed Stellar’s market cap well above much larger layer-1 competitors. It now even beats out Binance Coin (BNB) and Dogecoin in daily trading volume.
This boost in liquidity and overall market participation provide additional evidence of the burgeoning interest in Stellar, as well as its potential for continued growth.
Sustainability and Key Indicators
While Stellar's recent rally is undoubtedly impressive, the question remains: is it sustainable? Anjali Mehra warns investors against jumping on this momentum without paying attention to a few crucial indicators to determine whether this climb is sustainable in the long term.
Rising Open Interest and Altcoin Market
The increasing open interest in Stellar indicates a bullish investor sentiment and an indication of a more sustainable rally. Open interest is the total number of all outstanding derivative contracts like futures and options. As we discussed here, a rising open interest is evidence that new money is entering the market. This constant influx contributes to the ongoing upward pressure on prices.
A bigger bullish trend in the altcoin market has helped Stellar beat its all-time highs. Further, altcoin trading volumes have surged by a staggering 105% in just a week. This pump creates a risk-on environment, allowing for massive rallies in these other cryptocurrencies, which Stellar fits the profile of.
Key Indicators to Watch
Investors should closely monitor the following indicators to gauge the sustainability of Stellar's rally:
- Continued adoption of Protocol 23: The success of the smart contract functionality and parallel transaction processing will be crucial for attracting developers and users to the Stellar network.
- Further institutional partnerships: Securing additional partnerships with financial institutions and other major players will further validate Stellar's credibility and drive adoption.
- Growth in on-chain activity: Monitoring the volume and value of real-world assets being tokenized on the Stellar network will provide insights into its practical applications and long-term growth potential.
- Regulatory landscape: Changes in the regulatory environment surrounding cryptocurrencies could impact Stellar's adoption and price performance.
Beyond Cryptocurrency: Stellar's Broader Applications
Stellar’s technology goes far beyond the world of cryptocurrency, with applications across many industries.
Biotechnology Applications
Stellar technology, which uses non-invasive electrical pulses to stimulate cell growth and division, resulting in higher levels of biomass or product yields. This innovation has been pioneered alongside top academic institutes to turn innovative research into scalable industrial applications. Specifically, it speeds up and streamlines processes without significant new burdens on current infrastructure.
As an enabling technology, Stellar has the power to disrupt bioprocessing. It confers a substantial competitive advantage on the market that is getting more and more cutthroat. It can radically enhance production yields for applications from brewing to recombinant protein production and cultured meat.
Influencer Marketing Solutions
Stellar’s integrated solutions for influencer marketing enable brands to execute and optimize their influencer campaigns. Here are some examples of how Stellar assists various companies:
- L'Oreal Professionnel: Provides a discovery tool to find the right targeted influencer for the right topic.
- La Redoute: Helps manage their database of influencers, allowing them to better organize their services.
- Coty, Inc: Offers a user-friendly solution to manage influencers, create reports, and follow up on collaborations.
- The Walt Disney Company: Tracks content and KPIs for unboxing campaigns, leveraging AI to transform influencer marketing data.
- eDreams: Manages influencer marketing efforts, allowing them to work with the right targeted influencer for the right topic.
These varied applications show how diverse and powerful Stellar can be, with an eye toward long-term expansion well beyond the bounds of cryptocurrency.
Whatever happens, stay tuned and watch these major indicia closely. In doing so, investors will better be positioned to understand Stellar and its prospects for future success. At GreedyChain.com we’re here to arm you with the unique knowledge that will help you succeed in this dynamic new world of Web3.
