Stellar’s native XLM token rose roughly 40 percent in just three days of trading and became one of the best top-cap cryptocurrencies based on returns for weeks.
The XLM / USD exchange rate hit $ 0.178 on Tuesday, its highest level in three weeks after showing signs of decoupling from XRP, a competing cryptocurrency owned by San Francisco-based Ripple Labs. Its founder Jed McCaleb left the company in July 2013 to start Stellar. The two cryptocurrencies have remained positively correlated since then.
XLM Breakout ahead?
The proximity slowed significantly after the US Securities and Exchange Commission sued Ripple for allegedly selling illegal securities. Traders panicked XRP in December 2020, which also dragged down to XLM. On December 23rd last year, XLM / USD was trading at $ 0.11.
The couple also plunged into concerns that the SEC would also target Stellar and its founders. Later, many experts argued that XLM and XRP are overall different, one reason the New York Treasury Department (NYDFS) approved of Paxos Trust Company’s 2017 application to use it for over-the-counter trading.
“XLM is always very much correlated with X.RP, This explains the massive dump in the past few weeks, ”a pseudonymous analyst explained on Twitter, adding that the cryptocurrency appears poised to undergo a breakout.
Stellar trades within a falling wedge pattern. Source: XLMUSD on TradingView.com Stellar is trading within a falling wedge pattern. Source: XLMUSD on TradingView.com
The analyst cited a bullish reversal structure to explain its positive bias for XLM. As shown in the table above, the cryptocurrency was showing signs of breaking out of what is known as a “falling wedge” pattern. Technically, the pull should increase XLM by the height of the wedge, which is $ 0.084.
That puts the Stellar token at roughly $ 0.25 on the way, which is a 50 percent increase from the breakout point.
The switch from XRP to XLM will also take place when the Ukrainian government commissions the Stellar team to digitize the local currency, the hryvnia.
“The Ministry of Digital Transformation is working to create a legal environment for the development of virtual assets in Ukraine. We believe that our collaboration with Stellar Development Foundation will help develop the virtual asset industry and integrate it into the global financial ecosystem, ”said Oleksandr Bornyakov, Deputy Minister for Digital Transformation for IT Development.
To what extent XLM would drive the Stellar-Ukraine project remains unclear. But the news seems to be enough to put traders in a cheering mood. This explains the increase in XLM by more than 30 percent in the last 24 hours.