While Stellar (XLM +0.75%) remains a Top 30 crypto with a $2 billion market capitalization, it has never regained its luster from several years ago when investors were talking about it as a game-changing crypto payment network. In 2022, Stellar is down 72% for the year and is currently trading for less than $0.10.
Yet, there's a scenario in which Stellar posts 10X returns in 2023 and finally reaches the $1 mark -- something that it has never done in its entire eight-year existence. The all-time high for Stellar is $0.94, so obviously a lot has to go right next year. Here's a closer look at Stellar's path to $1 in 2023.
Become a best-in-class payment network again
In its heyday, Stellar was routinely lining up high-profile payment partners, everyone from IBM (IBM 0.58%) to Moneygram International (MGI +0.00%). Stellar offered an open-source, decentralized payment network that worked with any form of money, was lightning fast, and was unbelievably cheap. Several years ago, this type of payment network was truly innovative and helped build Stellar's reputation as a fast, trusted cross-border payment option.
Image source: Getty Images.
That's why I'm excited about a recent partnership that Stellar lined up with the United Nations High Commissioner for Refugees (UNHCR), the U.N. agency that works with displaced persons and refugees on a global scale. Stellar will primarily work with Ukrainian refugees fleeing the Russian invasion. Refugees need access to cash, and they need it in the currency of their new home country. Stellar makes a natural fit for the project -- its Stellar Aid Assist solution can convert any charitable contribution into the right form of local currency using stablecoins. This is exactly the type of project that can once again highlight the power and reach of Stellar's blockchain to solve real-world problems.
Find entirely new use cases for the Stellar blockchain
Via its Stellar Community Fund, Stellar continues to support innovative projects from the broader Stellar ecosystem. Over its lifetime, it has supported 415 projects. This year, Stellar just announced the 21 new winners of its grants program. All told, Stellar is investing approximately $1 million in these early-stage projects. This is important because Stellar really needs to expand the range of use cases for its blockchain.
CRYPTO: XLM
Key Data Points
Aside from the Stellar payments network, most casual investors probably couldn't name any other projects from Stellar. To get investors interested again, Stellar needs to find new use cases. With that in mind, one 2022 Stellar Community Fund winner that stood out for me was a blockchain-based carbon offset project to help fight global climate change. If Stellar can get out in front of blockchain-based climate change solutions, that might open up huge new market opportunities.
Benefit from the XRP court case
Throughout its entire existence, XRP (XRP +0.61%) has always loomed as a major rival. XRP has a payment network known as Ripple that essentially does the same thing the Stellar payment network does: facilitate cross-border payment flows. The key difference is that Stellar is open to the public and geared to small individuals, while Ripple is for banks and financial institutions. Right now, XRP has a market cap of $17.4 billion, while Stellar has a market cap of $2 billion.
While XRP is considerably larger than Stellar right now, it is locked up with the SEC in a contentious court case. The growing consensus is that we could get a final resolution to this SEC case by end of year. This might sound Machiavellian, but resolution of this court case in either direction might actually work in Stellar's favor. If XRP loses its court case with the SEC, then many crypto investors might finally give up on XRP and look for new ways to invest their money. That might lead them to Stellar. If XRP wins its court case, Stellar might get a short-term rally as well, as investors conclude that Stellar won't have to worry about a similar SEC case.
How realistic is $1 for Stellar?
On the surface, a price target of $1 would seem to be within the grasp of Stellar. If you look at a long-term price chart for Stellar, it's dominated by two massive peaks. One came in January 2018, when Stellar reached its all-time-high of $0.94. The other came in May 2021, when Stellar soared as high as $0.79. Both times, however, Stellar crashed back to earth.
If everything goes according to plan, then there's definitely a path to $1 for Stellar. There is already talk that Stellar could get involved with the rollout of Central Bank Digital Currencies (CBDCs), and if this happens, that would be huge for Stellar's long-term prospects as well. This is a highly risky, highly speculative play, and not for the faint of heart, but 2023 could be the year that Stellar finally aims for the stars and achieves its full potential with a 10X breakout performance.
