The price of Stellar's XLM token has seen a notable 2.50% increase over the past 24 hours, rising to $0.1223 at the time of writing. This positive price movement comes after a period of lackluster performance for XLM, which has declined 13.14% over the past month.
However, zooming out on the chart reveals an overall bullish trend for Stellar in recent months. XLM is up 47.88% over the past 6 months, significantly outperforming Bitcoin and many other major cryptocurrencies.
With a current market capitalization of $3.38 billion, Stellar ranks as one of the top 20 cryptocurrencies by market cap. Over $74 million worth of XLM changed hands in the past 24 hours, pointing to healthy trading volume and interest in the asset.
Let's take a closer look at some of the key factors driving Stellar's price action and what traders should watch moving forward.
Short-Term Technical Analysis
Analyzing Stellar's 1-hour chart reveals that the recent 2.50% surge allowed XLM to break out above short-term resistance around the $0.12 level. This breakout is a bullish technical sign and could signal further near-term upside for Stellar, especially if buy volume continues to increase.
The relative strength index (RSI) on the 1-hour chart is right around 67. This means XLM is currently not overbought and has room to rally before becoming technically overheated.
The 50-day moving average is trending above the 200-day MA, indicating an overall bullish posture for Stellar over the past couple months. As long as XLM can hold above support around $0.11, the path of least resistance appears to be higher in the near term.
There are several fundamental factors that help explain Stellar's improving price action and outlook:
- Increasing adoption - Stellar continues to ink partnerships, integrations, and listings that are driving real-world usage of its blockchain. For example, leading Latin American exchange Bitso recently added support for Stellar.
- Inflation reduction - The Stellar Development Foundation recently voted to reduce XLM inflation rewards by 88%. Lower inflation is generally bullish for an asset's value.
- Technical upgrades - Upgrades like CAP35 are improving Stellar's speed, scalability, and functionality. This makes the network more appealing for developers and users.
- Decentralized finance - Stellar is making a big push into DeFi. For instance, Ultra Stellar allows for decentralized trading on Stellar. More DeFi builds broader utility for XLM.
As long as Stellar continues executing on its technology and adoption roadmap, the project's long-term investment appeal remains strong.
12-Month Price Prediction
Given Stellar's improving technical and fundamental outlook, I anticipate further upside for XLM over the next 6 to 12 months. Here are some key predictions:
- Conservative: $0.20
- Moderate: $0.30
- Optimistic: $0.50
The low end of this predicted trading range would require a 63% increase from current levels. The high end would represent a 308% surge.
Stellar appears primed to outperform the broader crypto market over the next year. If Bitcoin enters a new bull market, it's very feasible for XLM to retest its all-time high around $0.90.
However, potential macroeconomic headwinds such as rising interest rates or recessionary forces could limit the upside. But overall, the 12-month outlook for Stellar looks promising.
Should You Buy Stellar?
Stellar offers traders and investors an intriguing opportunity to gain exposure to a high utility crypto asset with a history of outperformance during bull markets.
While short-term traders may consider waiting for a pullback after the latest 2.50% pop higher, long-term buyers are likely safe accumulating XLM at current levels.
Dollar cost averaging can help smooth out volatility and build a position over time. For those with a higher risk tolerance, small options trades could boost upside exposure while defining and limiting maximum loss.
Ultimately, Stellar appears fundamentally sound and technically positioned for further upside. The project is certainly one to keep on your radar, especially if the crypto bull market gains steam in 2023 and beyond.
How Will Increased Adoption Impact Stellar's Price?
Stellar's increasing integration with banks, fintech platforms, and emerging market payment providers is undoubtedly a positive catalyst for XLM price appreciation.
Real-world usage and adoption drives fundamental value. As more partners and users leverage the Stellar network to transfer payments, launch stablecoins, and access DeFi services, demand for the underlying XLM asset increases.
Higher demand combined with Stellar's fixed token supply of 50 billion XLM creates the potential for significant price increases over time.
Additionally, integration with payment platforms exposes XLM to millions of potential new users in regions like Africa, Southeast Asia and Latin America. This expanded accessibility can drive retail and institutional interest in the token.
Based on similar cryptocurrencies like XRP that have rallied sharply due to adoption by payment firms, Stellar appears well-positioned to see multiples of its current price as real-world usage accelerates.
Will Stellar's Inflation Reduction Unlock Further Upside?
Stellar's recent move to slash inflation rewards for XLM holders by 88% is a decidedly bullish development that could pave the way for much higher prices.
Lower inflation improves tokenomics by constraining XLM's circulating supply growth. Previously, over 20 billion XLM were scheduled to enter circulation from inflation rewards. Now that number drops to under 3 billion.
Constraining the increase in token supply allows demand to more directly impact XLM's price. Based on supply and demand economics, reducing inflation should exert significant upward pressure on Stellar's market value.
Other blockchain projects like Ethereum have seen their prices soar after cutting or eliminating inflation rewards. Stellar is likely to benefit from a similar effect, especially when combined with rising adoption and utility.
In conclusion, Stellar's impressive 47.88% gain over the past 6 months appears poised to continue based on bullish technical and fundamental trends. Key drivers include increased adoption, protocol improvements, DeFi integration and reduced inflation.
Traders should watch for a short-term pullback to establish positions, while long-term investors can likely keep accumulating XLM at current levels. Stellar remains a top crypto project to watch closely in 2023 and beyond.