Stellar (XLM) has experienced a significant surge in volume, reaching its highest levels since May 2021. This uptick coincides with Ripple’s (XRP) unexpected rally to $1 on Saturday, November 16.
XLM’s price also has risen by 30% in the last 24 hours, imitating XRP’s impressive performance. But why is this so? This analysis reveals everything that has to do with this closely-tied movement.
Stellar History with Ripple Remains in Effect
According to data from Santiment, XLM’s trading volume has surged to $2.96 billion as of this writing. This rise in volume clearly indicates growing buying pressure on the altcoin and a noticeable increase in market interest.
The last time XLM experienced such high volume levels was during the 2021 bull market, a period when cryptocurrency assets saw market-wide rallies.
This spike in volume suggests that investors are becoming more confident in XLM’s potential, especially given XRP’s recent surge. Historically, both altcoins have shared a strong correlation, majorly due to two reasons.
Firstly, Jed McCaleb, the former co-founder of Ripple, went on to co-found Stellar. The two projects share a strong connection, particularly in their focus on blockchain-based cross-border payments, making Stellar’s fundamentals closely aligned with Ripple’s.
As a result, XRP and XLM prices often move in together. Macroaxis data supports this, showing a 90-day correlation coefficient of 0.96. To put this into perspective, the coefficient ranges from -1 to +1. Values closer to -1 suggest a weak correlation, while those nearing +1 indicate a strong link between the assets.
Besides the XLM volume, the altcoin’s Open Interest (OI) is also another metric that experiences a notable hike. High OI indicates that capital is flowing into the market, with new positions being established, reflecting a strong bullish sentiment.
On the other hand, a low OI suggests otherwise. According to Santiment, XLM’s OI has risen to $75.05 million — the highest level since Ripple’s partial win over the US in July 2023. Should the value continue to increase, then XLM’s price might also rise above $0.20.
XLM Price Prediction: Possible Move to $0.24
On the daily chart, XLM’s price initially rallied to $0.22, but it faced rejection at that point. Despite the slight retracement, the altcoin’s value remains above the Ichimoku Cloud. The Ichimoku Cloud is a technical indicator that measures support and resistance and identifies trend direction.
When the cloud is above the price, the trend is downward, indicating a high level of resistance. But in XLM’s case, the cloud is below the value, suggesting strong support that could push the price higher.
If this remains the case and XLM’s volume continues to rise, then the altcoin could hit $0.24. However, if holders decide to book profits, this might not happen. Instead, XLM’s price could drop to $0.16.
Disclaimer
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Source: https://beincrypto.com/stellar-xlm-price-driven-by-xrp/