One of the most exciting cryptocurrencies on the market today is Stellar Lumens or XLM. The Stellar Lumens price has recently been increasing, and the direction will likely continue upward in the wake of the ongoing cryptocurrency bull market.
If you are investing in cryptocurrencies, you should know about Stellar, a trendy name in the crypto market. Although some people think that Stellar Lumens or XLM is a good investment, it has an entirely different mission.
Stellar, an open-source network, was created by Jed McCaleb and former lawyer Joyce Kim. According to its web page, “Stellar makes it possible to create, send and trade digital representations of all forms of money—dollars, pesos, bitcoin and ethereum pretty much anything. It’s designed so all the world’s financial systems can work together on a single network.”
In short, banking transactions take a minimum of one day. Bitcoin transactions, in turn, take 10 minutes. But Stellar goes even farther than that — all transactions take just a couple of seconds.
People generally ask, “Ok, Stellar is a network for financial institutions, what about Lumens?” Lumen is Stellar’s digital currency, and it has a very specific role. For every action in Stellar, you must pay a small amount of Lumen (the minimum per-transaction fee is 0.00001 lumen). This way, Lumens help the system function without spam or similar problems.
Lumens are quite different from Bitcoin or other cryptocurrencies. Unlike other cryptocurrencies, Lumens are not created every 10 or 4 minutes. With the launch of the network, founders created 100 billion Lumens. In October 2019, the overall Lumen supply was reduced to 50 billion.
Almost 20 billion Stellar Lumens are in the market, and the Stellar Development Foundation keeps 30 billion XLM for development and promotions.
Stellar Lumens Price History
The founders of the network did not create XLM for investment purposes. However, people have been holding the tokens for a while, which eventually led the XLM price to increase. If you look at the XLM price history, you can see a massive jump in the first week of 2021.
XLM’s first price in 2019 was slightly under 0.10 cents. For a couple of months, the price went above 0.10 cents — and then it dropped back to below 0.10. This trend continued till November 2020. Stellar Lumens XLM price reached 0.20 in 2021 for the first time.
In March, the price hit 0.53 cents. As a result, in over five months, Stellar Lumens price reached a quintuple growth rate.
Stellar Lumens Price Analysis
Stellar Lumens’ market cap is 12.3 billion dollars. Compared to Bitcoin, such a market cap is tiny — for reference, Bitcoin’s market cap is 1,1 trillion dollars. However, compared to other cryptocurrencies, XLM is still in an excellent position.
Maybe you do not understand the market capitalizations or other values. It is not essential. Market capitalizations generally use for guessing the future price. The logic is that if people buy more Stellar, the XLM price is likely to increase.
New investors generally try to find an answer to the same question, “Will Stellar Lumens reach $100?” Everything is possible in the crypto world. However, Stellar needs minimum 3 trillion market cap for this. Do not forget, more than 20 billion XLM is in the market compared to 19 million BTC. I’ve invested in XLM, but I do not think that Stellar Lumens’ price will reach $100 in a short time.
I must also tell you that some analysts believe XLM will never reach 1.00 dollars. For example, Longforecast.com has one of the most pessimistic forecasts. Their Stellar Lumens price prediction is 0.53 cent for 2025.
Why Stellar Price Will Increase In 2021?
In 2021 three events have affected Stellar Lumens XLM price. First, Ukraine’s Ministry of Digital Transformation signed a deal with the Stellar Development Foundation to work on both a central bank digital currency (CBDC) as well as stablecoin and virtual asset infrastructure.
Second, Stellar released Horizon 2.0.
To put it in simple terms, Horizon is an API server for the Stellar ecosystem. It acts as the interface between stellar-core and applications that want to access the Stellar network. And the update will boost the network’s efficiency, utilize fewer resources, and improve its flexibility.
Third, the Stellar Development Foundation (SDF) published its 2021 roadmap.
Apart from these things, also switching WhatsApp to Signal affected Stellar Lumens’ price. How?
WhatsApp, Signal, and Stellar
WhatsApp users started freaking out about privacy on the messaging app in 2021. Many users moved to other messaging apps, mainly to Signal.
At the same time, Signal is said to have conducted experiments for a cryptocurrency offering for users. Experiments for such a token project were done on MobileCoin, a privacy cryptocurrency based on Stellar.
Some people did not understand what was going on and thought that Stellar Lumens are Signal’s cryptocurrency. Naturally, they started to buy Stellar Lumens. This trend reached its peak point when Elon Musk encouraged people to use Signal.
Stellar vs. Ripple
People generally compare Ripple and Stellar from the technology point of view. Both projects aim to create payment networks to make sending money, for example, cross-border transactions, faster, cheaper, and more effective than fiat-based payments. The main difference between Stellar and Ripple is that Stellar is created for people, and Ripple is for institutions. Also, according to Jed McCaleb, their coding is different.
For a more detailed explanation, read our Stellar vs Ripple article.
Stellar Lumens Price Predictions
As I mentioned before, Longforecast is pessimistic about Stellar Lumens’ price. However, not all analysts think the same way. For instance, CoinSwitch believes that Stellar can go further up in 2021. Their long-term XLM price prediction tells us that the coin could hit 1.14 dollars by 2025.
Wallet Investor also has a similar prediction. Their estimations about Stellar Lumens XLM price are at an average of $0.763 in December 2022, $0.934 in December 2023, and $1.132 in December 2024.
What do you think about Stellar Lumens? Do you think Stellar Lumens will be the next significant currency? Please, write your opinions.
This article does not include any investment advice. It is worth noting that investing in any digital asset contains risks, which should be carefully assessed before making important decisions.