Stellar, a blockchain company focused on payments, is facing challenges within its ecosystem that have impacted the performance of its token, XLM. The XLM token has dropped by more than 44% from its peak this year, lagging behind popular cryptocurrencies like Bitcoin and Ethereum.
Established ten years ago, Stellar has struggled to gain significant market share in the payments industry. Data shows that the volume of stablecoins on its blockchain, mainly USD Coin, has increased from $6.95 million in December last year to over $210 million today. While this growth is noteworthy, it falls behind other blockchains like Tron and Ethereum, which have over $56 billion and $75 billion in stablecoin assets, respectively.
Further data reveals that Stellar’s recently launched blockchain, Soroban, has had difficulty attracting developers. According to DeFi Llama, it only has four DeFi dApps, such as LumenSwap, Blend, VNX, and SoroSwap. LumenSwap holds over $8.46 million in assets, while Blend has $1.03 million.
Soroban faces challenges in the highly competitive blockchain industry, with competitors like Base, Arbitrum, and Blast vying for market share. Blast, a recent launch, has attracted $1.25 billion in assets, while Base has over $1.4 billion.
Despite these challenges, Stellar’s price has shown bullish patterns that could lead to an upward movement in the near future. The XLM token has formed a falling wedge pattern on the daily chart, indicating a potential reversal. Additionally, the MACD indicator has shown a bullish divergence pattern, and the RSI has broken out above the upper side of the triangle pattern, suggesting a potential breakout for Stellar Lumens.
However, there are risks to this bullish outlook. Bitcoin has formed a double-top chart pattern and a rising wedge, indicating a bearish breakout. Bitcoin’s failure to surpass the key resistance level at $60,000 following the US inflation data release suggests the possibility of a drop below $50,000, which could impact altcoins like Stellar.