Can Stellar Cryptocurrency Ever Hit $1?

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Robinhood Markets (HOOD 4.75%) has just announced that it will add Stellar (XLM 3.25%) to its menu of crypto assets in its popular trading app. This unexpected news comes at a time when the price of Stellar has been in freefall for much of 2022. Is it finally time for Stellar, which is trading at around $0.12, to make a run at $1? ?

Even with the good news from Robinhood, a lot has to happen for Stellar to hit $1. In its entire history (dating back to 2014), its all-time high was just $0.94. It’s true: even during the frothiest crypto markets in recent years, Stellar never breached the psychologically important $1 barrier. So let’s look at some of the factors that could help propel Stellar to the $1 mark.

The Robinhood Seal of Approval

Stellar is one of the top 30 cryptocurrencies by market capitalization and is widely available for trading on major cryptocurrency exchanges. But getting listed on Robinhood could be a great way to get in front of even more investors, especially millennial and Gen Z crypto enthusiasts who dream of super cheap cryptos exploding to the moon.

Right now, there are less than 20 cryptos listed on Robinhood for trading, so Stellar gets an implied but very important seal of approval. At the very least, people who forgot all about Stellar will now get a subtle reminder every time they log in to buy or sell popular cryptos on Robinhood.

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The Stellar payment network

Stellar’s true value lies in its payment processing network. By using the token, you can send money around the world almost instantly and at almost no cost. In a hypothetical example, a bank in Japan could send money to a bank in Mexico at no cost, almost instantly.

This is actually a big deal because if you weren’t using Stellar, you would have to convert yen to pesos and also use an international payment network to send money from Japan to Mexico. Ordinarily, this type of transaction would really increase foreign currency conversion fees and costs.

So it makes sense that Stellar has lined up many major payment partners around the world, including IBM and MoneyGram International, to make sending money cheaper and easier. IBM, for example, used Stellar to build a proprietary global payment network, and MoneyGram used Stellar to lower the cost of sending remittances around the world. Stellar’s goal is to connect the global financial system, not replace the global financial system. So you can see why many people have been optimistic about Stellar’s prospects in the past.

New innovations in preparation

In early 2022, Stellar unveiled a roadmap for the future which involved a number of interesting elements. One of them is smart contracts. You can think of smart contracts as “programmable currency”, and this could be very important for the future of Stellar, adding even more value to the payment network.

And Stellar has highlighted the need for more diversity and innovation in how and where its services are delivered. He noted that markets such as Mexico, Brazil and Kenya could become critical to his future as a market innovator in developing countries, as part of his mission to serve the unbanked globally. .

So why didn’t Stellar’s price go interstellar?

Given all the new buzz surrounding Stellar, why is it still trading for mere pennies? One answer might be that it has far more rivals than it did in 2014. Emerging blockchains that have recently launched are touting their lightning-fast transaction processing speeds. And don’t forget, Stellar has long had a direct rival in XRP (XRP 4.43%)which has a payment processing network often compared to that of Stellar.

At the moment, it seems that the most optimistic scenario for Stellar is that it recovers to its late 2021 highs within the next 24 months. This would require tripling the value. From there, Stellar should roll out a lot of partnerships with financial services companies and expand globally to triple again and have a chance of hitting the magic $1 mark. But if Stellar manages to pull off this feat, it could turn out to be one of the biggest 10-bag crypto investments ever.

Dominique Basulto has no position in the stocks mentioned. The Motley Fool has no position in the stocks mentioned. The Motley Fool has a disclosure policy.

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