According to U.Today, Ripple's Chief Technology Officer, David Schwartz, recently shared his thoughts on the parallel price movements of XRP and Stellar (XLM). Schwartz, who was instrumental in the development of the XRP Ledger, suggested that external factors beyond their ecosystems might influence the similar price behavior of XRP and XLM. He acknowledged that there is evidence both supporting and contradicting this theory, highlighting the complexity of the matter.
Schwartz pointed out the impact of Stellar's significant token burn last year as a key factor. Despite the reduction of half of the total supply, this event did not cause a noticeable change in Stellar's price or its correlation with XRP. This led Schwartz to believe that a similar burn of Ripple-owned XRP would likely not positively affect XRP's price. He referred to charts comparing the price behavior of XRP and XLM before and after the burn, which showed no significant change.
Despite their similar price behavior, XRP and XLM have different tokenomics. XRP has a total supply of 99.98 billion tokens, with 55.43 billion tokens in circulation, a price of $0.525, and a market capitalization of $29.1 billion. On the other hand, XLM has a total supply of 50.001 billion tokens, with 28.976 billion in circulation, a price of $0.1083, and a market capitalization of $3.14 billion.
The price correlation between XRP and XLM can be attributed to their intertwined history and market dynamics. Stellar, created by Ripple co-founder Jed McCaleb as a decentralized alternative, often follows XRP's movements. Investors tend to seek opportunities in similar assets, leading to capital flow into the market and equalizing the price dynamics of these two cryptocurrencies.