Riding the Ripple Effect: What’s Next for Stellar Lumens (XLM)?

Stellar Lumens (XLM) price continues to rally. Over the past 24 hours, XLM is up 15%, bringing its price in line with Ripple competitor XRP. Indeed, both coins are up about 65% (at this stage) since the summary judgment in Ripple’s legal battle with the US Securities and Exchange Commission (SEC).

Notably, the relationship between Stellar Lumens (XLM) and Ripple’s XRP has been an interesting story of correlation and decoupling. As the market reacted to the recent developments in the Ripple-SEC battle, XLM followed suit and experienced a notable price increase. However, as broader market conditions cast their shadow, the question begs: can Stellar Lumens maintain its newfound independence and continue its upward trajectory?

Correlation between XLM and XRP

It is no secret that Stellar Lumens and Ripple’s XRP share many similarities in their blockchain technologies and use cases. Furthermore, founder Jed McCaleb’s ties to Ripple add another layer of intrigue, as investors expect XLM to not be considered a security by regulators.

As a result of this connection, XLM often mirrors the price movements of XRP. Market anticipation of Ripple developments being equally impactful for Stellar has often led to such correlated movements, as was the case following Ripple’s decision last week. However, in recent days, Stellar Lumens has managed to stay on its feet, demonstrating its ability to decouple from XRP’s fortunes.

One factor in this may be its partnership with MoneyGram, which led to an innovative B2B service called MoneyGram Access. The service enables the worldwide stablecoin USDC to be converted into cash through MoneyGram’s branch network, which taps into the Stellar ledger for seamless execution. This strategic collaboration has not only boosted Stellar’s use case, but has also catalyzed the recent rally in its price.

With the integration of Access into various applications and fiat ramping up, the demand and utility of XLM has grown significantly. For example, the integration of the Honeycoin app for direct cash outs in several African countries and the United Kingdom may have contributed to Stellar’s outperformance relative to XRP in recent days.

we are excited to share @honeycoinapp Users can now withdraw cash from their USDC balance at supported times @money Gram Locations in Kenya, Uganda, Tanzania, Nigeria, Ghana and the UK 🥳️

Another real world use case for @circleUSDC on Stellar.

— Stellar (@StellarOrg) 17 July 2023

Another factor in XLM’s recent strong performance could be the extremely high interest on the futures market. Open interest for Stellar Lumens surged to over $120 million yesterday, a level not seen since the peak of the bull run in November 2021. Notably, this phenomenon is similar to that of XRP, with Open Interest also rising to previous record highs.

Stellar Lumens Price Outlook

Despite experiencing a sharp rally, Stellar Lumens still remains in the bearish zone when looking at the 1-week chart. For this week, it is important that XLM price retests the 23.6% Fibonacci retracement level at $0.1583 as well as the 200-week EMA at $0.1597 (blue line). With the weekly RSI at 73, another upside move is possible.

On the 1-day time frame, XLM remains above all moving averages (EMAs). For a further bullish trajectory, it is important for Stellar to stay above the $0.1250 support. If this happens, XLM could experience another 35% rally towards the 38.2% Fibonacci retracement level. However, a decline below the $0.1250 support will challenge the bullish outlook.

Featured image from Oranfireblade / Pixabay, Chart from Tradingview.com