Lumens (XLM) is the native token of the Stellar network, a hybrid blockchain that aims to facilitate across asset transfers at minimum cost for users. It has differentiated itself from direct competitors like Ripple (available on Binance) over the last week, buoyed by a trifecta of good news.
A potential listing on Coinbase, a partnership with STron (available on Binance)ghold and IBM to host a US dollar backed stablecoin on the Stellar blockchain and XLM becoming the first Sharia approved distributed ledger technology, have all coincided to boost XLM’s price by over 50% since the 13th of July.
 
The graph shows the normalized USD price, and volume, of 5 different XLM trading pairs over 7 days.  XLM/BTC, XLM/USDT, XLM/KRW, XLM/USD and XLM/EURO. The orange line represents an Index of the prices, blue is XLM/BTC, yellow is XLM/USDT, green is XLM/KRW, navy is XLM/USD and XLM/EURO is turquoise. The bar charts below represent total trading volume in USD, with colours corresponding to the lines
Exchanges and trading pairs

Currently trading at $0.28 (Index) XLM’s most active trading pairs are both crypto-to-crypto with XLM/Bitcoin (available on Coinbase) and XLM/TETHer making up over 60% of the daily Lumens trading volume. The next three most popular pairs are all fiat to crypto with Korean Won/XLM, US dollar/XLM  and EURO/XLM, these pairs make up over USD50 million worth of 24 hour volume. Other on-ramp options include Ethereum (available on Coinbase)/XLM, BNB/XLM and Indonesian Rupiah/XLM.
 

The most popular exchange for trading XLM/BTC is Binance, it is also currently the 2nd most popular BTC pair on the exchange after ETH/BTC. Binance has just celebrated its 1st birthday, and has risen to become the world’s most popular exchange for purchasing digital assets, handing over a billion USD of traffic daily. Other popular exchanges for trading XLM/BTC include Poloniex and Bittrex. The most popular exchange for USDT/XLM is also Binance, while Yobit handles most of the KRW/XLM volume.
XRP and Stellar: The devil is in the detail
Ripple (available on Binance) (XRP) and Stellar (XLM) were both created and developed by Jed McCaleb. He parted ways with Ripple (available on Binance) due to a breakdown in his relationship with other senior leadership at the project, leaving to found the Stellar network.
As well as having similar tickers, the technology underlying the projects is comparable, in fact, Stellar began as a Gitfork (a lifted repository from Github) of Ripple (available on Binance) .
Neither Stellar or Ripple (available on Binance) uses miners, with consensus on the networks being handled by validators, who earn minimal financial rewards. There is no Proof-of-Work style competition to solve a block’s problem, but rather the network runs the consensus vote when a leader node transmits a block (based on a predetermined internal state), and the other nodes then vote on it.
This consensus style is referred to as a Byzantine fault tolerance protocol. Within these protocols, groups of trusted nodes called Quorums are formed, and it is the shared agreement between Quorums that achieves network consensus.
A question of trust
Stellar has introduced subgroups of the larger Quorum called Quorum slices. What makes the ‘Quorum Slice’ system novel, is that nodes within the Quorum choose their own slices. Therefore Stellar’s consensus becomes quite trust-based, more so than the payment merchant ‘Gateway’ protocol of Ripple (available on Binance), which favours consensus driven by the nodes on the starter membership list.
A node can at any point, be a part of multiple different Quorum slices and receive information such as the reputability of particular financial institutions or the stability of a fiat currency from other validators on the network that it trusts.
While the Stellar consensus can claim superiority over other Distributed Ledger Technologies (DLT’s) as nodes are designed to be constantly communicating with each other, leading to streamlined consensus, the system sacrifices anonymity and decentralization.  
Nodes keep tabs on each other and are selected from a small pool. This ensures throughput remains constant, and transactions costs can be kept low. However, attributes like trustlessness and fidelity, which are some of the key proposed advantages of blockchains, are not really applicable to the Stellar network.
Taking off with Coinbase
News on the 14th of July that Coinbase was considering adding XLM to its trading platform is the primary factor in the current Stellar Lumens price and volume surge. A Coinbase listing matters because it is one of crypto’s oldest and most successful projects, having been founded six years ago and earning a reported 1 billion US dollars of revenue in 2017. 
Beyond this, it has managed to poach mainstream talent from organisations like TD Ameritrade and Facebook Messenger, and is used as a point-of-sales processor for Expedia and Dell. A listing on Coinbase is considered a valid institutional vote-of-confidence because of the stringent compliance requirements of the GDAX framework. For tokens that clear the Coinbase listing hurdles, added liquidity, a secure trading option and increased awareness typically follow.
The icing on the cake of the potential listing for XLM is that the token is being considered ahead of its perennial rival Ripple (available on Binance). As mentioned earlier, both protocols are built on a similar algorithm, with Ripple (available on Binance) also having a much higher market cap. Ripple (available on Binance) has often been criticized, however, for leaving too much network decision making in the hands of centralized validators. In this sense, Stellar’s ‘slice’ model adds a layer of communication and consensus streamlining that the brains trust of Coinbase must have appreciated.
 
Expanding the ecosystem with stablecoins
On the 17th of July, it was announced that STron (available on Binance)ghold, an asset-agnostic global payment and trade place, would be building a USD backed digital currency, STron (available on Binance)ghold USD, to be hosted on the Stellar blockchain.
The concept of STron (available on Binance)ghold USD, is that it will be issued one-for-one to buyers who deposit cash into Prime Trust, STron (available on Binance)ghold’s custodian financial partner. For Stellar, a USD anchor means an easier fiat onramp to the network which should lead to a boost in transaction activity. Having an onchain stablecoin versus using an external stablecoin like TETHer or TrueUSD, lets Stellar make transfers using the low transaction costs and fast speeds that the network is vaunted for.
In addition, news that Stellar is the first DLT to receive Sharia certification gives the network added weight because the robust nature of Islamic finance has made it challenging for cryptocurrencies to be embraced by Middle Eastern communities. The approval will give Lumens first mover advantages in affluent Gulf economies like Bahrain and Saudi Arabia.
Stellar network statistics
While the news around the prospects of the Stellar Network, and future usage of the Lumens tokens, have been positive, primary fundamentals have been mixed.
From a peak number of daily payments, 1,314,780 made on the 12th of February this year, 119,999 payments were made on the 2nd of July, a significant dip. However, over the same time period the number of Stellar accounts rose steadily, and there were also twice as many trades on the Stellar network on July 2nd versus the 12th of February.

 
Stellar also provides its own dashboards, displaying up-to-date information on transactions and operations run on the network. These charts evidence that both these metrics have fallen over the last 30 days.

This indicates that the recent price movements have been driven primarily by speculative sentiment rather than any improving operational factors driving the network forward.
The dashboard also displays currently active verified validators, and live nodes such as IBM India, IBM USA and IBM Hong Kong stand out from this list.
Technical analysis
The price of XLM has increased markedly via the positive sentiment surrounding the potential Coinbase listing and partnership with IBM.
Fibonacci Retracement with Long Term Trends
On the 1D chart, XLM’s 2018 linear price trend has been declaratively negative, with a Pearson’s R Correlation between time and price of 0.706 (regression channel). However, despite the negative trend, price has found reliable support around the $0.17 level, which coincides with the 0.236 fibonacci retracement level (solid black line / orange arrow). Price has bounced off that level ~5 times to date. The most recent bounce has culminated in a big price leap to ~$0.29, which coincides with previous resistance and the upper 2 standard deviation boundary.

Additionally, the volume flow indicator (VFI) has consistently remained above 0 since mid-May, and formed an uptrend despite prices declining until mid-July (black arrow). The VFI interpretation is a value above 0 is bullish and below 0 is bearish, with divergences between price and oscillator being high probability signals. This positive trend above 0 coupled with prior price divergence, may signal enough buying volume to test the channel breakout level of ~$0.36 (red dashed line).
However, the SWTO is approaching overbought territory (black circle), which may lead to a failure of the $0.36 level and resumption of the downward, linear trend afterward, towards the $0.17 support level (critical to hold).

Ichimoku Clouds with Slow Wave Trend Oscillator (SWTO)
The Ichimoku Cloud uses four metrics to determine if a trend exists; the current price in relation to the Cloud, the color of the Cloud (red for bearish, green for bullish), the Tenkan (T) and Kijun (K) cross, Lagging Span (Chikou), and Senkou Span (A & B).
The status of the current Cloud metrics on the 1D frame with singled settings (10/30/60/30) for quicker signals is mixed; price is in the Cloud, Cloud is bearish, the TK cross is bullish, and the Lagging Span is beneath the Cloud but above price.
A traditional long entry would occur with a price break above the Cloud, known as a Kumo breakout, with price holding above the Cloud. From there, the trader would use either the Tenkan, Kijun, or Senkou A as their trailing stop.
XLM is currently sitting at ~$0.29 and is currently attempting a Kumo breakout with the key breach level being $0.32. The SWTO is approaching overbought territory (black circle), which may suggest that $0.32 will act as sTron (available on Binance)g price resistance. The near support levels are $0.23, $0.20, $0.17 (solid black line), while longer term (more bearish) support levels are ~$0.10, ~$0.06, and ~$0.03 (dashed lines). Price targets for a successful Kumo breakout are ~$0.37, ~$0.45, and ~$0.50.

The status of the current Cloud metrics on the daily time frame with doubled settings (20/60/120/30) for more accurate signals is mixed; price is in the Cloud, Cloud is bearish, TK cross is neutral, and the Lagging Span is beneath the Cloud but above price.
XLM is currently attempting a Kumo breakout but has failed four times to breach the Cloud resistance level of $0.32. Additionally, the current SWTO level approaching overbought, may make a failed Kumo breakout likely. Price will need to break and hold $0.32 (flat Senkou B) to make a new, sustainable uptrend for XLM likely.

Conclusion
Stellar has reinvigorated itself as a potential investment in the last week, with a series of eye-catching partnerships and connections. Its consensus algorithm is novel but remains predominantly centralized which may turn away many blockchain purists.
The technicals for XLM are mixed, offering glimpses of positivity in the short term, but continued negative sentiment in the long run. Both, the prudent short term trader (10/30/60/30) and longer term trader (20/60/120/30) will await a positive TK cross and Kumo breakout above ~$0.32 before entering a long position. The near term support levels for these traders are $0.23, $0.20, $0.17, while bearish, longer term support levels are ~$0.10, ~$0.06, and ~$0.03. Price targets for a successful Kumo breakout are ~$0.37, ~$0.45, and ~$0.50.
Additional analysis of Stellar (XLM) can be found here.
Disclaimer: This analysis has been designed for informational and educational purposes only. Readers are advised to conduct their own independent research into individual assets before making a purchase decision.
About the authors
Christopher BrookinsChristopher Brookins is the founder and CEO of Pugilist Ventures, a quantitative investment firm focused on digital assets and blockchain technology. Chris has a deep knowledge and unique perspective on digital assets formed by his polymath experience in equity trading, credit investing, and business development at two West Coast startups (one acquired). He has been involved in the blockchain community since 2014. Follow @chris__brookins
 

Aditya DasAditya Das is Brave New Coin’s in-house market analyst. Raised in Dubai, UAE, he holds a post-graduate honors degree in Economics from the University of Auckland and a BA in Economics from the University of Sussex. Prior to joining BNC his most recent roles were as a researcher and Economics tutor at the University of Auckland. Follow @Quartlifecrypto