- Ripple and XRP are still wrestling with the SEC nearly a year after the lawsuit was first filed.
- Given the inherent similarities between the target space for XRP and XLM, some speculate that regulators may target Stellar next.
- XRP and XLM prices indicate a 100% upside potential in the near future.
The lawsuit brought by the US Securities and Exchange Commission (SEC) against Ripple and XRP has gone from something that was meant to be a quick one to a battle of attrition. The Securities and Exchange Commission served Ripple for the sale of unregistered securities on December 22, 2020, but the payments company continued to make progress in the East, where it was welcomed.
While there does not appear to be an end in sight to this lawsuit, some speculate that Stellar, a strikingly similar cryptocurrency project, could be what the SEC will go for next.
This article takes a look at the differences, similarities, and possibilities if regulators set their sights on stellar lumen.
Ripple and Stiller: Brothers in Remittances
Despite the fact that much of its history is shrouded in mystery, Ripple Labs, more commonly known as Ripple, is the company behind XRP. The token is designed as a mechanism for payments, liquidity, and transaction settlement that uses the Byzantine Federal Agreement Consensus Protocol released in 2012.
Ripple is currently the company that looks after the XRP Ledger and its developments.
On the other hand, Stellar takes a slightly different approach. It is an open source, distributed payment network that uses the Star Compatibility protocol.
Like XRP, XLM is the original asset of the Stellar blockchain that runs on the system of Byzantine Federal Agreements launched in 2015. Unlike Ripple, the Stellar Development Foundation (SDF) is interested in the development of XLM.
Chris Larsen and Jed McCaleb co-founded Ripple, but McCaleb left to start Stellar due to disagreements in the team. Furthermore, both tokens are looking to solve a similar cross-border payments issue and are positioned with the right partners to do the same.
While institutions are actively looking for investment opportunities in the cryptocurrency space, they are being cautious due to the ambiguous nature of regulators’ stance on digital assets. Bitcoin and Ethereum, for example, are preferred by institutional investors, as they are considered commodities. However, there is no such distinction between XRP, XLM and other cryptocurrencies, which prevents these high net worth individuals from getting a stake in the cryptocurrency.
Let’s take a look at some of the key differences between XRP and XLM.
Key Differences Between Ripple (XRP) and Stellar (XLM)
While these differences are stark, what puts Ripple and XRP in trouble and keeps Stellar and XLM safe boils down to two things:
The entity responsible for XLM is called “non-profit” while Ripple is not. This precise identification is what puts XRP in the crosshairs of regulators.
The New York Department of Financial Services (NYDFS) has given XLM a go-ahead to trade on the New York Stock Exchange.
In a press release issued on December 3, 2019, NYDFS granted virtual currency licenses to 24 cryptocurrencies such as Bitcoin, Bitcoin Cash, Ether, Ether Classic, LiteCoin, and Stellar Lumens.
Management approval of SoFi licenses for virtual currency and money transfers provides consumers with more choices in an ever-evolving global financial services market.
The press release mentions the delivery of two licenses – virtual currency and money transfer licenses – which put XLM in the safe zone and make XRP vulnerable.
The two licenses will allow SoFi Digital Assets to provide its New York clients with the ability to buy and sell virtual currencies. The company is authorized to support virtual currencies Bitcoin, Bitcoin Cash, Ether, Ether Classic, LiteCoin and Stellar Lumens.
While XRP acquired BitLicense in 2016, it allowed Ripple to sell XRP to institutional investors or use it for their products like xRapid.
Despite the lawsuit and the repercussions, Ripple appears to be making progress. However, nothing is certain until the case is completed. The same is true of Stellar and XLM, which are currently far from the prying eyes of regulators.
Regardless of obstacles or developments on both sides, the technical aspects of XRP and XLM look bullish.
XRP Price Expected to Double Soon
XRP price is forming a round bottom on the weekly chart extending to an all-time high of $3,317 in 2018. To complete this technical formation, Ripple needs at least 152% higher. This move will put the price of XRP at $2,750. After this point, the conversion token is likely to round out all-time highs and overtake it to create a new token.
Using the trend-based Fib extension between the 2020 low at $0.114, the April 12 swing high at $1,967, and the June 21 swing low at $0.509, revealing the first target at $8.78. This increase will be 725% up from its current position.
XRP/USD 1-week chart
While things look to the XRP price, a breakdown of the upside by producing a lower low below the recent swing low at $0.858 will invalidate Ripple’s bullish scenario.
XLM price is still going strong
XLM price is also showing a bullish look as it is forming a cup and handle on the weekly chart. This setup has a round bottom known as the cup, and is often followed by a simple swing called the knob, hence the name cup and knob.
This pattern predicts a rise of 1,830%, which is obtained by measuring the distance between the right top and bottom of the cup and adding it to the breakout point.
As for the price of XLM, adding 1.830% to $0.716 reveals a theoretical target of $13.78.
XLM / USD 1 week chart
Regardless of the optimism, if XLM price produces a lower bottom below $0.234, it will invalidate the bullish theory and potentially lead to further downside.