XLM, a cryptocurrency backed by Stellar Lumens, an open-source, decentralized payment protocol, surged as much as 11-percent in the past 24 hours.
The upside move started brewing during the early European trading session on Monday, as the XLM moved from 0.108 to 0.118. The trend underwent a small correction, hinting a minor bull flag formation, that led the price to Tuesday morning low at $0.113. XLM retested the same level once again following an upside rejection during today’s European session. But overall, the cryptocurrency maintained its bullish bias on a two-day performance basis.
IBM announced Monday that it had partnered with six international banks to use Stellar-powered blockchain payment network. Per its statement, Stellar’s blockchain would allow those banks to move value across borders more cheaply and swiftly than traditional payment networks – using stablecoins. IBM also admitted that it had proposed its new partners to use XLM as a bridge currency whenever it becomes hard to trade one fiat-backed stablecoin for another.
That explained one part of the XLM’s upside performance, which is similar to the cryptocurrency’s earliest price actions around similar announcements. For instance, XLM had posted 11.20-percent gains in three days soon after Germany-based media company Börsenmedien AG announced a partnership with SatoshiPay, a platform that – like IBM – uses Stellar blockchain solutions.
The other part of bullish sentiment came from Coinbase. The US-based crypto exchange announced Monday that it was going to add XLM-enabled trading pairs to its platform. Such additions are known to be bullish if one looks at the history of Coinbase listings. Just recently, XRP’s listing on the exchange had also sparked an upside price move in its market.
Fundamentally, XLM could be in for a strong bullish move purely out of speculation. There is no clarity whether or not those six international banks would use XLM for their cross border payment trials. The mention of stablecoin in IBM’s announcement itself explains that banks are not ready to risk their remittance services over a volatile asset. So far, XLM is inside the picture only as a backup currency. But how much demand does a backup asset can attract cannot be known.
Technically, the XLM price is trending inside a small rising wedge formation, which is bearish. As the rate approaches the apex of the wedge, it could note it’s trading volume falling. Eventually, the XLM price could break below the wedge support, opening a short opportunity towards a breakdown target towards $0.107.