Stellar Lumens (XLM) price rally has stalled recently as it took a breather following a near 500% short squeeze. The XLM token was trading at $0.5290 on Tuesday morning, a few points below the year-to-date high of $0.6370. It has surged by 630% from its lowest point this year.
Why did Stellar Lumens price short squeeze?
Stellar and Ripple are often grouped together in the crypto industry since they were all formed to disrupt the payments industry.
Ripple’s goal was to have companies like banks and money transfer firms embrace its RippleNet technology. In this, these firms would use its infrastructure, including the XRP token to facilitate trade.
Stellar, on the other hand, created technology that can be used by these firms to power their payment networks. Its most important partnership has been with Circle, the creator of USD Coin, the second-biggest stablecoin in the industry.
It has also inked a deal with MoneyGram, a leading player in the payment industry. That partnership ensures that users can send and receive USDC in thousands of locations globally. This is a big partnership that will drive growth over time because it is at the intersection of blockchain and fiat.
The Stellar Lumens price has also had a short squeeze because of the rising amount of money in its blockchain. Data shows that the network’s total value locked (TVL) has jumped to over $60 million.
A $60 million TVL is much lower than that found in other newer chains like Sui and Base. However, it is worth noting that Stellar’s layer-1 network known as Soroban was launched a few months ago.
The biggest players in Stellar’s network are players like LumenSwap, Blend, Aquarius Stellar, and FxDAO.
Notably, Stellar has become a big name in the Real World Asset (RWA) tokenization industry. Its biggest partnership has been with Franklin Templeton, a large asset manager with over $1.5 trillion in assets.
Franklin now uses Stellar’s blockchain to power the Franklin OnChain US Government Money Fund (FOBXX) which has attracted over $400 million in assets. There are signs that assets in this money market fund are increasing even with US interest rates falling.
Stellar Lumens has also soared as hopes that institutional investors will buy it soon jumped. Canary, a top financial services company, has already filed for a spot Stellar ETF.
Meanwhile, the recent Donald Trump victory has made Stellar and Ripple more attractive to investors. That’s primarily because Ripple has gone through a rough patch with the SEC in the past few years.
XLM price forecast
Stellar price chart | source: TradingView
The weekly chart shows that the XLM token bottomed at $0.0760, where it formed a double-bottom pattern. It has moved above the key resistance point at $0.1945, its highest swing in July 2023. That was an important level since it happened after Ripple won a major lawsuit against the SEC.
Stellar Lumens price has now jumped to the strong pivot reverse point at $0.5860. It has also rallied to the 38.2% Fibonacci Retracement level.
Also, the Stellar price has moved above the 50-week and 100-week Exponential Moving Average (EMA). Also, the coin is showing signs of forming a bullish pennant pattern. This pattern is made up of a long vertical line and a triangle pattern.
Stellar’s Relative Strength Index (RSI) and the MACD indicators have pointed upward. Therefore, there is a likelihood that the Stellar lumens will have a strong bullish breakout in the coming days. If this happens, the next point to watch will be at $0.9765, the extreme overshoot point. This price is about 85% above the current level.
On the flip side, a drop below the key support at $0.4400, its highest point in November 2021 will point to more downside.
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