Why Stellar Lumens (XLM) Is So Cheap?

Last Updated January 13th 2022

8 Min Read

Why is Stellar Lumens this cheap? Will it ever shake off the low price tag and record significant price jumps?

Well, Stellar Lumens and the Stellar Blockchain have been trying to boost its coin prices by burning excess coins and welcoming off-chain brands like IBM to develop cash transfer programs on their network. It has even attracted the attention (positively) of such governments as Ukraine, which seeks to build and launch a national Digital Currency on the blockchain. Still, it struggles with low prices and has found it hard - twice now - to break above $1.

This doesn’t by any means make it less valuable or a poor investment. Remember that at the height of the May 2021 crypto market rally, Stellar Lumens’ market capitalization exceeded $17 Billion - making it almost as valuable as Lyft. And that to get here, XLM coin prices had jumped by 500%+ year-to-date.

Today, Stellar Lumens is more valuable than several highly-priced cryptocurrencies and tokens, including Filecoin that is currently valued at $30.35 but with a market capitalization of $4.48 Billion.

In this article, we want to understand why Stellar Lumens is lowly priced and determine if it is worth buying.

But to get here, we first need to understand Stellar Lumens’ price history and some of the factors contributing to its low prices. Only then can you tell if it has a chance of growing these prices, how far up it can reach, and if it is a worthy investment.

Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

Stellar Lumens Price History

Stellar Lumens is a first-generation cryptocurrency. It launched in August 2014 and was one of the most eagerly awaited cryptocurrency projects because of the revolutionary ideas it sought to introduce into the global financial system.

Long before it launched, Stellar Lumens had already captured the attention of most popular finance and technology companies, including Google, Fast Forward, and even BlackRock, who contributed funds towards its creation.

CoinMarketCap captures XLM’s earliest trading price as $0.0029. By the end of that year, this price had doubled to $0.0058. But this was as far as it got because it started falling, with the XLM coins trading well below $0.003 for the next three years.

It wasn’t until mid-2017 that Stellar Lumens prices started gaining momentum and crossed the $0.1 mark for the first time on 5th December 2017. From this point on, it felt like Stellar Lumens prices were unstoppable, and this rally went on until 3rd January 2018, when it set the current ATH $0.938.

For the next two years, Stellar Lumens would struggle to find a footing and was caught up in often volatile and down trending price rages as high as $0.6 in 2018 and as low as $0.03 in early 2020. Its next lease of life would come around the last quarter of 2020 when the crypto markets started rallying - again.

At the beginning of the rally in November 2020, Steller Lumens coins were trading at $0.07 but doubled this value to $0.15 on the first week of January. For the next five months, Stellar Lumens prices would rise by over 500% but miss the $1 target, only to set last year’s ATH of $0.796 on 16th May 2021.

However, between then and now, Stellar Lumens has shed more than 60% of this value to trade at $0.28.

We hadn’t mentioned that when Stellar Lumens launched, it introduced 100 Billion XLM coins to the market. In November 2019, however, Stellar Development Foundation CEO - Denell Dixon - announced that they had burned over 55 Billion XLM coins, effectively cutting Steller Lumens’ supply by more than half.

By this time, notable institutions had embraced the Stellar blockchain and either launched or expressed commitment to build different programs on the platform. These included IBM, the Ukrainian government, ICICI Bank of India, Flutterwave, and even TechCrunch.

Both the burning of coins and these strategic collaborations had the potent of exciting Stellar Lumens prices, at least above $1.

So why didn’t they? Why are Stellar lumens still lowly priced? And what does this say about XLM as an investment?

We answer these below.

Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

Why Is Stellar Lumens XLM So Cheap?

A number of factors can be attributed to Stellar Lumens XLM incredibly cheap prices. One could argue the case of demand and supply, competition, and the most recent Ripple effect.

Demand and supply here affect Stellar Lumens prices in two ways. Initially, the large supply of Stellar Lumens coin - over 100 Billion - could have eliminated the incentive to increase XLM coin price. Not to mention that the Stellar Foundation still owns close to 30 Billion that they are yet to distribute. Today, the slowed demand for Stellar blockchain technology could also be used to explain the low XLM coin prices.

We must also add that while Stellar Blockchain was revolutionary in 2014, there has since emerged more innovative technologies, especially on the Decentralised Finance niche that pose real competition to the Stellar blockchain and Lumens. Other crypto technologies that pose a real threat to Stellar Lumens include Ripple and Facebook’s upcoming Libra project.

Stellar Lumens may also be lowly priced because crypto analysts and XLM investors are concerned that financial regulatory agencies may turn on the cryptocurrency - like the SEC did Ripple. The threat is perceived as even more imminent when you take into account the fact that Stellar is perceived to be a Ripple imitation.

Should I Buy Stellar Lumens (XLM) While It Is Still Cheap?

It now feels like the ship for such valuable coins as Bitcoins and Ethereum has long sailed, which makes most investors turn their attention to cheap but supposedly promising coins like Stellar Lumens XLM.

But is this a good idea?

To an extent, especially when you take into account such factors as the coin’s projected growth and as well as the crypto and off-chain community’s belief in Stellar network, you may get the idea that Stellar Lumens XLM is a good store of value. But then, when you look at its price history, you realize that the altcoin has a tendency of either down-trending, especially after a bullish rally, or being trapped in price stagnation.

This implies that now may not be the best time to buy Stellar Lumens, especially if you do not intend to buy and hodl. Given the raging Stellar Lumens price action, however, you may consider trading XLM CFDs and taking advantage of the rising and falling coin prices.

Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

Is Stellar Lumens Worth Buying?

Stellar Lumens has, on several occasions, been ranked among the most promising cryptocurrencies. It is scalable, has been widely embraced, and analysts believe that it has the potential to break out and post astronomical price gains.

Some cryptocurrency price prediction experts are even confident that Stellar Lumens prices will continue rising over the next decade. Most are confident that Stellar Lumens would get back to the May 2021 price levels before the end of the year if the current market conditions were to prevail. Others are optimistic that the coin will reach $1 some time next year and rise beyond $5 within the next five years.

Will Stellar Lumens Bounce Back?

Before the disruption to the crypto markets, Stellar price predictions had intimated that Stellar Lumens XLM would break above its 2018 price levels before the end of the year. This optimism has not died yet, and most traders are still optimistic that XLM Coin prices will eventually reach $1. These analysts have, however, kicked the realization of these price predictions down the road and now expect Stellar to reach parity with the dollar in or after 2022.

Note, however, that markets can be highly unpredictable. No one can predict with absolute certainty whether Stellar Lumens prices will rise, how far up they can reach, and when it will get here.

Conclusion

The low uptake of Stellar blockchain technology probably due to stiff competition and the threat of regulation maybe some of the key reasons keeping Stellar Lumens prices low for this long.

Stellar Lumens have had a complicated past, struggling to escape relatively low prices and break above $1. Most crypto analysts and investors are nonetheless convinced that it would continue uptrending and probably reach as high as $10 in the next five years.