- Stellar (XLM) has experienced a sharp decline, dropping 45% from its peak earlier this year, partly due to broader market downturns and technical factors like the double-top pattern.
- However, with potential catalysts such as a favorable crypto policy under Donald Trump and the anticipated launch of an XLM ETF, there is hope for a recovery in the long term if the price surpasses key resistance levels.
The cryptocurrency market has seen its fair share of ups and downs in 2024, with Stellar (XLM) being no exception. After a strong surge earlier in the year, XLM has recently suffered a sharp decline. Let’s dive into why this happened, how far Stellar’s price could fall, and whether there’s any hope for a future recovery.
A Harsh Reversal
Stellar’s price has taken a significant hit, dropping to $0.3570, its lowest level since November 23. This decline marks a 45% drop from the coin’s peak earlier this year, signaling a reversal in momentum. The downturn has come amid broader struggles in the crypto space, where major players like Bitcoin (BTC) and Ripple (XRP) have also faced declines. Bitcoin, which tends to lead market trends, dropped to $97,700, down from last week’s high of $104,000, contributing to the overall negative sentiment.
XLM’s price action has mirrored that of XRP, which also took a hit, falling 25% from its all-time high. However, XLM is known for its more volatile price swings, often experiencing larger fluctuations than XRP. For example, in November, XLM surged more than 500%, while XRP’s rise was around 450%.
The Impact of Market Trends
Stellar’s current pullback follows a classic chart pattern known as the double-top, which is typically seen as a bearish signal. After reaching a peak at $0.6040, the price has since fallen below key levels, including $0.4168, the neckline of the double-top. According to the Wyckoff Method of technical analysis, assets go through four stages: accumulation, markup, distribution, and markdown. Currently, XLM seems to be in the markdown phase, where supply outpaces demand, leading to a decrease in price.
The next potential support level to watch is around $0.2900, where the 61.8% Fibonacci retracement point lies. If this downward trend continues, this could be a crucial target for the coming weeks.
Potential for a Recovery
Despite the current downturn, there are some optimistic signs that Stellar could make a comeback in the long term. For one, the crypto industry may get a boost if Donald Trump’s administration proves to be more crypto-friendly, as Eric Trump recently indicated. Additionally, the anticipation of a spot XLM ETF in 2025 is gaining momentum, which could attract institutional investors and help push the price higher.
Furthermore, Stellar’s decentralized finance (DeFi) network continues to grow, with its total value locked rising to $46 million. The market capitalization of its stablecoin has also hit over $146 million, showing strong developer interest and growth potential.
Looking Ahead
While Stellar’s price faces challenges in the short term, the long-term outlook could be more promising. If XLM rises above $0.6355, the year-to-date high, it could set the stage for a rally toward the $1 mark. For now, investors should stay vigilant and keep an eye on key support levels as the market continues to evolve.
