Stellar Lumens (XLM)

Stellar Lumens is a non-profit organization (Stellar Development Foundation) that wants to create an open network of storing and moving money. They allow almost any kind of valuta, or form of money, to be transferred in their open-source network. This would allow all the world’s financial systems to work together. They also want to tap in the market of people that do not have a bank account, which is still a relevant percentage in today’s world. Stellar is active since 2015 and the big name behind Lumens is Jed McCaleb. Jed has also been a co-founder of Ripple and the famous exchange MtGox. Stellar Lumens is number 11 on coinmarketcap with a market cap of around 1,48 billion dollar.

To show the use-case of Stellar Lumens, I will give an example : if you want to give 100 dollars to a friend that lives in the USA and you live in France, you simply put in your euros and Stellar’s network will do the rest. They will convert your euros into Lumens (XLM) and from Lumens it will go to dollars at the end for a very low fee. This transaction will go very fast (in a matter of seconds) and arrives almost instantly. Compare this to a bank transfer from France to the USA and you know what I am talking about. This is a big advantage of Stellar Lumens. Since it can handle almost any kind of currency, it will open a new innovative way of cross-border payment that will be much more efficient.

Stellar Lumens came to be after Jed McCaleb decided to leave Ripple and create his own project. The main differences between Ripple and Stellar Lumens are :

- Ripple wants to use cross-border payments for banks and institutions, while Stellar Lumens aims as well for the everyday individual and micropayments.

- Stellar is a non-profit organization and therefor has no shareholders or dividends. They will only have salaries and expenses. Ripple has as a goal to make profit.

IBM is one of the big partners that Stellar can boost with. IBM World Wire uses Stellar Lumens to send any currency anywhere in the world. This is mostly for financial institutions like banks.

Ledger Live integration

Recently Ledger announced that it would integrate XLM in the Ledger Live. This is good news for Stellar and makes it a lot easier to manage. You can add an account while you are on Ledger Live and you choose XLM of course. What is very handy is that it automatically wants to add the XLM you have on the stellar.org wallet through Ledger Manager. You can accept this of course and it will go in your account on Ledger live.

XLM weekly chart

Here is a weekly chart of Stellar Lumens compared to the dollar on Binance :

For the weekly chart I have drawn a channel for price and on the bottom you have the indicator OBV, which is the smart money and On Balance Volume. I have drawn several lines on this indicator because it seems to be behaving inside two different channels. It is clear to see that the OBV has been rising for years and price has been declining. Every time inside the channel we see lower highs and lower lows. This makes me a little skeptical that we are still in a downtrend and marks the question if we can ever get out of it ? OBV is telling us yes ! We are creating higher lows on OBV and lower lows on price and this is bullish divergence. Price is creating w-patterns which are also positive to see. After a long period of balancing in the under part of the channel, we have seen another touch at the top. We are getting very close to the apex and it will either break out to the upside or to the downside. Downside would be extremely bearish and breaking above it would finally confirm what OBV has been telling us for a long time.

What is impressive to see for me is that the bottom red line in price has been holding since the beginning of this cryptocurrency on Binance. We see support holding every time with this line. In terms of OBV we see the exact same thing with the bottom red line. This time the difference is that it is going upwards, but it gets supported since the very beginning.

A close above 0,08$ would give us a first attempt at a real break out. It is important to notice that once price goes above it, it does not mean automatically that it has done its job and we will rise and rise. It can be a bull trap. It is very important to close another week above the line to more or less confirm it. Furthermore a very good way would be to re-test the upper red line, but this time it would hold as support. Every week this line is going down a little bit, so if we were to stay inside the red channel for a while longer, we would break out at a lower price than 0,08$. If we go to the downside the channel would support us a little lower than the 0,03$ mark. However I do not think we will get there anymore and think the 0,04$ will hold already.  

My own view

Stellar Lumens was one of my first cryptocurrencies to invest (towards the end of 2017) in and I am holding it since. I saw the rise towards 0,80$ and the fall all the way to 0,03$ ! What a rollercoaster ride that was ! I still like the project and believe that it can be useful in this world, especially for the unbanked. However there are some question marks I have. Jesse Lund (ex-head of blockchain at IBM) was an important person in creating the partnership between IBM and Stellar and he left IBM last year. It is not clear why he left and if this has a lasting impact on the partnership. Another question mark is the enormous amount of XLM that got burned (50 billion !) Maybe there was just too many XLM still left and the reality at the moment does not reflect the amount of XLM needed, so they decided to burn it. On the other hand maybe this was just a play to artificially prop up the price of XLM. My last concern is the price of XLM and the channel it is in. It is creating lower highs and lower lows for a couple of years now and that is not very good. On the other hand the On Balance Volume is rising the last couple of years and normally volume precedes price, which means we should see price rising in time.

Conclusion

Stellar Lumens is an interesting non-profit project that wants to revolutionize cross-border payments for everybody, not just the banks. Their platform allows you to transfer any kind of currency all over the world, with little or no cost and with incredible speed. Their partnership with IBM is obviously a big plus, but with Jesse Lund leaving as the head of blockchain of IBM, people wonder if this partnership is going to last. 50 Billion XLM got burned last year and makes less supply, which in turn is good for he price of XLM, but 50 billion is a lot and remains a question mark. The weekly chart shows a downtrend for years in price inside a channel and the On Balance Volume, which is the smart money, shows a rising trend for years. The disagreement between the two usually gets resolved by price following the OBV in time, but so far we do not see that yet, so it remains a doubt for now if price can ever recover towards the upside.

All in all I still like this project and believe that price will recover in the future. This will take time, but I do still believe that hodlers will get rewarded for their patience. Question marks remain on this project for me, but I guess that every project has its good and bad things.

This is not financial advise and I am not a financial adviser. Please do your own research and make your own decisions.