Stellar (XLM) price explodes 10% as it approaches $0.09

Stellar (XLM) price explodes 10% as it approaches $0.09
Written by:
Michael Harris
19th October, 14:00
  • Stellar has been selected to become the third blockchain to support USDC
  • XLM price is trading nearly 10% higher as it works to close above the resistance line at $0.0844
  • A high close would invite new XLM buyers to target a return to the $0.12 area

Stellar (XLM) price is trading nearly 10% higher on the day after the buyers forced a break of the daily resistance line at $0.0844. The latest news that Stellar will become the third blockchain to support the USDC stablecoin have continues to drive XLM price higher. 

Fundamental analysis: Stellar support to increase transaction speed and reduce fees

Centre Consortium, which manages the USDC stablecoin, announced that Stellar will become the third blockchain to support USDC. The launch is expected to occur in the first quarter of 2021. 

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As a stablecoin, one USDC is always worth one US dollar. USDC partners tend to save a certain amount of dollars in their bank accounts when new USDC is issued into circulation. 

The accounts constantly undergo audits that make sure there is the same amount of USDC in circulation and USD in those bank accounts. Right now, there are around 2.8 billion USDC in circulation. 

Other cryptocurrencies are different from stablecoins as stablecoins provide certain flexibility in regards to storing value as there’s no need for a bank account. However, Ethereum-powered stablecoins face additional challenges like low transaction speed and high transaction fees. 

That’s why Stellar supporting USDC will solve these issues to some extent as it will increase transaction speed and reduce fees. Investors will have to select a channel when transferring USDC and choose between Ethereum, Algorand and Stellar. 

Furthermore, when sending USDC from one exchange to another, investors will have to ensure that both support the stablecoin on that particular blockchain. 

Circle, the co-founder of USDC, has also created a multichain USDC swap API. Some developers will be able to leverage this API for cross-chain swaps if for example, they face certain liquidity challenges. 

Users will have an even better experience if enough developers embrace the swap API. In that case, users won’t have to worry too much about which blockchain they’re using when trading USDC. 

Technical analysis: XLM bursts higher

XLM/USD price has gained a further 10% today after closing the past two weeks higher. This way, the digital asset has broken above the horizontal resistance line at $0.0845, triggering stop losses that have lifted XLM price to $0.8747 today.

XLM/USD daily chart (TradingView)

A close above the red line is likely to pave the way for a test of the next major resistance line at $0.090 (the purple line). This close would invite new XLM buyers to target a return to $0.12.

Summary

Stellar is expected to start supporting USDC at some time during the first quarter of 2021, according to the announcement by Centre Consortium.

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