Stellar’s native token XLM surged about 40 percent in just three days of trading, becoming one of the best performing top-cap cryptos based on weekly returns.
The XLM price hit $0.197, its best level in three weeks, after showing signs of decoupling from XRP, the rival cryptocurrency issued by San Francisco-based Ripple Labs. Its founder Jed McCaleb left the project in July 2013 to launch Stellar. The two cryptocurrencies have been positively correlated ever since.
XLM Breakout Ahead?
The convergence slowed considerably after the US Securities and Exchange Commission sued Ripple for allegedly selling illegal securities. Traders dumped XRP in a panic in December 2020, which also dragged XLM down. As of Dec. 23 last year, XLM/USD was trading at $0.11.
The XLM pair also plunged amid fears that the SEC would also target Stellar and its founders. Later, many experts argued that XLM and XRP are completely different, one reason why the New York Department of Financial Services (NYDFS) approved Paxos Trust Company’s application to use them for over-the-counter trading in 2017.
„XLM is always highly correlated with XRP, which explains the massive dump in recent weeks,“ a pseudonymous analyst said on Twitter, adding that the cryptocurrency is „ready to experience a breakout move.“
The analyst referred to a bullish reversal structure. As seen in the chart, the cryptocurrency showed signs of breaking out of a so-called „falling wedge“ pattern.
That puts the Stellar token roughly on track to hit $0.25, a 50 percent increase from the breakout point.
The shift from XRP to XLM also comes as the Ukrainian government hires the Stellar team to digitize its national currency, Hryvnia.
„The Ministry of Digital Transformation is working to create the legal environment for the development of virtual assets in Ukraine. We believe that our cooperation with Stellar Development Foundation will contribute to the development of the virtual asset industry and its integration into the global financial ecosystem,“ said Oleksandr Bornyakov, Deputy Minister of Digital Transformation for IT Development.
The extent to which XLM would drive the Stellar Ukraine project remains unclear. But the news seems to be enough to put traders in a jubilant mood.