Stellar Lumens (CCC:XLM-USD) is making headlines as a crypto that continues to perform well in the long run. Despite the recent volatility in the price of XLM, the altcoin is up over 150% year-to-date (YTD).
By comparison, Bitcoin (CCC:BTC-USD) and Ethereum (CCC:ETH-USD) have returned about 25% and 240% since early January, respectively. XLM started this year around 13 cents and then soared to a 52 week high of 79 cents in May before plunging as low as 28 cents during the crypto crash. Yet it has since gained momentum and is currently hovering around 33 cents.
Today, we’ll take a closer look at what the rest of the year could hold for Stellar Lumens. Analysts point out to its competitive advantage in the Decentralized Finance (DeFi) space. With a market capitalization of $7.8 billion, XLM could grow a lot more. Bitcoin and Ethereum have approximate market caps of $699 billion and $286 billion, respectively. If you plan to buy Stellar Lumens, it’d be important to ignore the short-term choppiness and stay invested for the long-run. Here’s why.
Connecting Digital Currencies and Financial Institutions
Stellar Lumens is an open blockchain network used by individuals and institutions for cross-border transactions. Widely known as the PayPal (NASDAQ:PYPL) of cryptocurrency networks, the platform works as a bridge that connects digital currencies and traditional financial institutions.
The crypto was launched in 2015 by Jed McCaleb, co-founder of Ripple (CCC:XRP-USD), as an altcoin alternative to XRP, which has a market cap standing at $40 billion. It stayed in the shadow of Ripple for some years. But now it has the potential to get ahead given the lawsuit against Ripple.
In December, the SEC charged two Ripple executives, alleging that they sold $1.3 billion of XRP in unregistered sales. Currently, many investors are waiting for the result of the court case before buying Ripple.
XLM offers solid benefits to its users, who can easily convert any currency on the Stellar Lumens platform. Regardless of the size of a given payment, each transaction costs just 0.00001 XLM and usually takes only a few seconds.
The consensus protocol relies on authentication of transactions executed through a set of nodes. The authentication cycle is short and rapid, meaning Stellar Lumens can keep costs low and its carbon footprint to a minimum.
Partnering With Stellar Lumens
Global financial transactions are skyrocketing. According to PayPal, robust global e-commerce levels mean that more than $300 billion a year is spent across borders. Meanwhile, the Stellar Development Foundation has initiated a large number of partnerships with prominent businesses, such as IBM (NYSE:IBM) and Franklin Resources (NYSE:BEN).
New associations also include the web wallet Lumenshine, tokenized precious metals issuer MINTX, Nigerian crypto gateway Cowrie, investment bank Kapilendo, and asset custodian BitGo.
Finally, Stellar Lumens is the first global blockchain product recognized as Sharia-certified. It can soon be used as a transaction network in Sharia-compliant financial applications. If the platform can continue to develop new partnerships, the crypto is poised to make a mark in the financial world and deliver generous returns in the long run.
The Bottom Line on Stellar Lumens
Increasing levels of adoption have provided significant tailwinds for XLM’s price. The platform, based on a solid technical foundation, offers real-world utility for the cross-borders payment market.
Grayscale, the world’s largest crypto asset management firm, has revealed that it holds 5,566,271 Stellar Lumens. It makes a powerful statement about the crypto’s long-term potential. Meanwhile, the supply of new Stellar Lumens added to the blockchain stopped permanently in 2019. Cutting the creation of XLM could become a significant catalyst for the cryptocurrency. The demand will likely keep growing while supply stays the same, similar to Bitcoin’s extremely gradual increase in supply.
But for now, the price of XLM depends greatly on how the broader crypto market performs. Investors who can tolerate short-term volatility should consider buying the dips as a long-term investment.
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On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Tezcan Gecgil, Ph.D., has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.