The post How Stellar’s (XLM) Close Ties with XRP Boosted Its Price appeared on BitcoinEthereumNews.com.

Stellar (XLM) price has increased by 9.15%, making it one of the top five altcoin gainers in the last 24 hours.  Market participants are likely unsure why the token, which has been out of the spotlight for a while, is now rising. This analysis unravels the details and how it is linked to a major development. Stellar’s Decade-Old Development Brings It a Much-Needed Result For those unfamiliar, XLM is the native token of Stellar, a blockchain that facilitates trades for the unbanked. However, this project was founded by Jed McCaleb, who is also one of the co-founders of Ripple (XRP). Since McCaleb’s decision to create Stellar about 10 years ago, XLM and XRP have almost always shared a strong correlation. Besides this, both Ripple and Stellar focus on cross-border transactions with only a slight difference in technology employed. Therefore, the sudden spike in XLM’s price is linked to the recent settlement of the long-standing Ripple-SEC lawsuit, which saw XRP’s price climb by more than 20%. As of this writing, the correlation coefficient between the tokens is 0.86. The correlation coefficient ranges from -1 to +1. Values close to -1 indicate a divergence, suggesting that prices rarely move in the same direction. However, a reading close to +1 suggests strong directional movement. Read more: What is Stellar & How Does it Work: Deep Dive Into XLM Stellar (XLM) and Ripple (XRP) Correlation. Source: Macroaxis To buttress this point, an investment in XLM on a 30-day horizon would have brought in a slightly lower return than one in XRP. Furthermore, the development has triggered a surge in XLM’s Open Interest (OI). Open Interest is the total value of outstanding derivative contracts that are yet to be settled. An increase in this value typically indicates increased liquidity allocated to contracts. If it surges, it…

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Filed under: News - @ August 9, 2024 2:16 am