As Ripple's XRP captured attention by nearing its all-time high and pushing its market valuation beyond $184 billion, another digital asset quietly made significant strides. Stellar (XLM), often viewed as Ripple's counterpart, surged to a high of $0.5146—its strongest performance since early December. This represents an impressive 555% increase from its lowest point in 2024.
Many investors are now asking: could Stellar be a more affordable alternative to XRP?
Understanding the Connection Between Stellar and Ripple
The correlation between Stellar (XLM) and Ripple (XRP) is more than superficial. Data analysis reveals a correlation coefficient of 0.99 over the past seven days and 0.85 over the previous month. When two assets demonstrate such strong correlation, they tend to move in similar directions within the market.
This connection stems from their operating in similar domains within the cryptocurrency ecosystem. Both projects focus on transforming how value is transferred across borders and between institutions, though they approach this mission through different technological pathways.
Different Missions, Similar Space
Ripple primarily aims to simplify cross-border payments through its RippleNet technology, creating connections between financial institutions globally. The platform facilitates faster, more cost-effective international money transfers for banks and payment providers.
Stellar, meanwhile, provides the underlying technology for organizations to build their own payment solutions. It also serves as a major network for USD Coin (USDC) transactions. Through its partnership with MoneyGram, Stellar enables users to send and receive this stablecoin across thousands of physical locations worldwide.
The historical connection between the projects adds another layer to their relationship. Stellar's founder, Jed McCaleb, was also a co-founder of Ripple. While XLM isn't a direct hard fork of XRP, this shared origin explains why the two are often described as "cousins" in the crypto space.
Catalysts Driving Stellar's Potential
Several factors suggest Stellar could continue its upward trajectory alongside Ripple. Positive developments for XRP, such as the potential approval of an XRP ETF, would likely create favorable conditions for an XLM ETF application. The foundation for institutional interest already exists: the Grayscale Stellar Lumens Trust has attracted over $59 million in assets despite its 2.5% management fee.
From a technical perspective, Stellar's price chart shows promising patterns. The weekly chart reveals a golden cross formation, where the 50-day moving average crosses above the 200-day moving average—a classic bullish signal among traders.
Perhaps most significantly, XLM appears to have substantial room for growth compared to its counterpart. While XRP approaches its historical peak, Stellar would need to rise approximately 65% to reclaim its 2021 high of $0.80. This potential upside, combined with its current lower price point, makes it an attractive option for investors seeking exposure to the cross-border payment sector without XRP's price tag.
The asset is currently testing last year's high of approximately $0.6350. A sustained breakthrough above this resistance level could signal further momentum toward its all-time high. 👉 Explore real-time price analysis tools
Investment Considerations for XLM
For investors evaluating Stellar as a potential investment, several factors deserve attention. The project's established partnerships with organizations like MoneyGram provide real-world utility beyond speculative trading. Its role in the stablecoin ecosystem through USDC integration offers another use case that may drive long-term adoption.
The regulatory environment remains a consideration for both Stellar and Ripple. While Ripple has made significant progress in its legal challenges, regulatory clarity tends to benefit the entire sector, potentially creating rising tides that lift all boats in the cross-border payment space.
When considering position sizing, investors might note that Stellar's lower absolute price per token doesn't necessarily make it "cheaper" in valuation terms—market capitalization provides a more accurate measure of relative value. However, the psychological aspect of owning more tokens at a lower price point shouldn't be entirely dismissed in retail trading dynamics.
Frequently Asked Questions
What is the main difference between Stellar and Ripple?
While both focus on cross-border payments, Ripple primarily targets institutional clients like banks and financial institutions. Stellar focuses more on providing infrastructure for organizations to build payment solutions and facilitates stablecoin transactions.
Why do Stellar and Ripple prices often move together?
The high correlation stems from their similar market niches, shared historical roots, and overlapping investor bases. When developments affect the cross-border payment sector, both assets typically respond in similar directions.
Does Stellar have the same growth potential as Ripple?
While past performance doesn't guarantee future results, Stellar's current distance from its all-time high suggests potentially greater percentage growth opportunity. However, Ripple's larger market capitalization and institutional adoption may provide different types of stability and growth potential.
What are the main risks investing in Stellar?
Like all cryptocurrencies, Stellar faces regulatory uncertainty, market volatility, and technological adoption challenges. Its correlation with Ripple means developments affecting XRP could significantly impact XLM's price.
How can I track Stellar's performance?
Numerous cryptocurrency tracking platforms provide real-time price information, charting tools, and market data. 👉 Access advanced market analysis resources
Is Stellar better for transactions than Ripple?
Both networks offer fast, low-cost transactions, but their different architectures may make one more suitable for specific use cases. Stellar's integration with stablecoins may make it more attractive for certain payment scenarios.