Stellar (XLM), one of the top ten cryptocurrencies according to data from Coinmarketcap, experiences high price volatility at the moment. Just like other altcoins, the cryptocurrency has soared. However, its price ultimately fell back to its previous market value.
As Bitcoin experiences one of the lowest rates of volatility since May this year, volume flowed into the altcoin segment, causing a significant price increase for assets such as Ether, XRP, EOS, and others. Stellar had one of the most significant gains, rising up to 30% in just a few hours. In the end, the price momentum of Stellar has not only stopped but went downward as well.
While a part of the crypto community believes that the event was just another pump and dump scheme caused by a whale, services such as Whale Alert have not reported any significant XLM transactions.
Created in 2014 by Jed McCaleb, founder of Mt. Gox and co-founder of Ripple, the Stellar network has the goal of facilitating cross-asset transfers at a cost-efficient rate. As a scaling solution that is meant to solve the fundamental problems of Bitcoin, Stellar also acts as a payment system for cross-border transactions by significantly reducing the time it takes to process a transaction, at a minimal fee.
The team behind Stellar has recently decided to give away a sizeable amount of its tokens in partnership with exchanges such as Coinbase. With the goal to give away two billion tokens over the span of 20 months, the company would effectively give away $124 million.
In contrast to Ripple’s recent deals and partnerships, the XRP community should be content that their token is at least sold for utility purposes, compared to the situation of XLM where the token is literally given away for free, causing the price of the asset to go down.
Stellar’s decision is so drastic in terms of its effect on the market price, that it may even catch the attention of the U.S. Securities and Exchange Commission (SEC). The SEC is known for having an aggressive stance when it comes to protecting US-based investors, which may lead to the Stellar founding team being investigated.
Can we expect an altcoin bull run?
With Ether’s price unexpectedly rising at the start of the week, the asset might have paved the way for a sudden altcoin bull run. Trading at around $210 at the time of writing, Ether’s surge has caused other altcoins to follow the lead and have their price increased as well with some assets rising up to 20%.
While the reason behind this event remains unknown, market analysts speculate that the stagnation of Bitcoin’s price might have led to money flowing into other projects. Mati Greenspan, the senior market analyst at eToro, commented on the situation by saying that “it’s plain to see that bitcoin has been extremely stable.”
Referencing the contradicting price movement of Bitcoin in contrast to other assets, Greenspan added that it might be ‘too early to call this an altseason’. However, he believes that the current situation might as well turn into a mini bull run for altcoins.