Stellar Lumens (CCC:XLM-USD) is up 143% so far this year. As of June 16, it was trading at 32.3 cents per token. XLM hit its highest price of 2021 on May 10 and has since fallen 40.7 cents — a drop of 55.7%. But there is good reason to believe that Stellar Lumens could rebound before the end of the year.
It doesn’t hurt that Stellar Lumens has been very popular over the past year. The XLM price has risen from 7.189 cents a year ago to 32.3 cents today. That represents a gain of 349% over the past year. This makes it one of the best crypto alternatives to Bitcoin (CCC:BTC-USD).
Stellar Lumens’ Standout Features
Stellar Lumens is a payment technology designed to ease global money transfers with a blockchain software platform. The network combats spam by using lumen tokens to pay transaction fees. It also functions as a bridge currency and provides liquidity to assets issued by “anchors,” which are trusted entities on the network.
Stellar Lumens was founded by Jed McCaleb and attorney Joyce Kim in 2014 after the former had a conflict with Ripple’s (CCC:XRP-USD) management. Now the Stellar Development Foundation oversees and supports the growth of the Stellar blockchain.
The Foundation invests in projects around the world that help develop the Stellar Lumens platform. For example, it recently invested $15 million in Airtm, a Mexican digital wallet and peer-to-peer exchange platform company. This was the fifth in a series of similar investments, but stands out as the largest the Foundation has made so far this year.
Earlier in the year, the Stellar Development Foundation invested in a Nigerian fintech company based in London. It also dropped $3 million on Tribal Credit, a U.S.-based fintech platform focused on Latin America. Finally, the Foundation invested $5 million in Wyre, a fintech applications company on the Stellar network.
Stellar Lumens initially issued 100 billion tokens and distributed over half of them in a “cryptocurrency airdrop.” Lumens were given to people who signed up through an invitation link at a rate of about 50-300 XLM per person. Right now, the network mints new coins at no cost to the circulation at a rate of 1% per year.
In November 2019, the Stellar Development Foundation burnt 55 billion of its 105 billion tokens. It now controls 30 billion of the approximately 50 billion tokens in existence.
Where This Leaves XLM
The supply of tokens is now fixed, as XLM holders voted to discontinue inflation on Oct. 28, 2019. This means there won’t be any more tokens to increase the supply and potentially dilute the price.
Despite its recent drop over the past month, XLM still has a $7.4 billion market capitalization. This shows that plenty of people believe in the cryptocurrency’s value. Additionally, CoinMarketCap ranks Stellar Lumens as the 18th largest crypto on the market.
Recently, the number of Stellar Lumens accounts grew 11% during the first quarter. These accounts could have been created for money transfers on the Stellar Lumens platform. Alternatively, the boost may have come from people storing XLM tokens in digital wallets after buying it on an exchange like Coinbase (NASDAQ:COIN). Either way, these are both good indications of Stellar Lumens’ popularity.
It is also a sign that Stellar Lumens can rebound towards its former peak prices. This means that now might be a good time to average cost into holdings of XLM.
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On the date of publication, Mark R. Hake held a long position in Bitcoin (BTC-USD). The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.
