Stellar (XLM) Faces Bearish Pressure Despite Network Growth as Exchange Supply Hits Record High

Stellar (XLM) Faces Bearish Pressure Despite Network Growth as Exchange Supply Hits Record High - Blockchain.News

Quick Take

• XLM currently trading at $0.38 (-2.28% in 24h) • XLM RSI at 41.69 suggests neutral momentum with potential downside bias • VersaBank partnership announcement provides positive catalyst amid exchange supply concerns

What's Driving Stellar Price Today?

The XLM price is experiencing downward pressure today despite several positive developments over the past week. Most recently, VersaBank announced plans to leverage the Stellar blockchain for testing its tokenized deposit USDVB, marking another institutional adoption milestone for the network.

However, this positive news is being overshadowed by concerning market dynamics. XLM supply on exchanges reached an all-time high of over 1.03 billion tokens on August 23rd, creating significant selling pressure that continues to weigh on the XLM price. This surge in exchange supply suggests traders and investors are positioning for potential sales, creating a bearish overhang despite fundamental improvements.

The network has shown remarkable growth metrics recently, with Stellar's Total Value Locked surging over 80% from $84 million in July to $152.11 million in August. Additionally, XLM accounts hit a new peak of over 9.69 million, indicating robust ecosystem expansion. Despite these positive fundamentals, the immediate price action reflects market concerns about the substantial token supply available for trading.

XLM Technical Analysis: Bearish Signals Emerge

Based on Binance spot market data, Stellar technical analysis reveals a mixed but increasingly bearish picture. Stellar's RSI of 41.69 sits in neutral territory but shows a downward trajectory, suggesting weakening momentum that could push XLM into oversold conditions.

The MACD indicator confirms this bearish bias with a negative reading of -0.0070 and a histogram value of -0.0058, indicating that selling pressure is building. Stellar's Stochastic oscillator shows extreme readings with %K at 1.21 and %D at 7.12, suggesting XLM is approaching oversold levels that could trigger a short-term bounce.

XLM's position within the Bollinger Bands is particularly telling, with the token trading near the lower band at $0.37. The %B position of 0.0838 indicates XLM is operating close to this key support level, which often serves as a launching point for reversals when combined with oversold momentum indicators.

Moving averages paint a concerning picture for short-term XLM price action. The token is trading below its 7-day SMA ($0.40), 20-day SMA ($0.42), and 50-day SMA ($0.42), though it remains above the crucial 200-day SMA ($0.31), preserving the longer-term bullish structure.

Stellar Price Levels: Key Support and Resistance

Critical Stellar support levels are now in focus as XLM tests lower boundaries. The immediate support at $0.38 aligns with the current trading range and serves as the first line of defense against further declines. This level coincides with the pivot point, making it crucial for maintaining short-term stability.

Should this level fail, the next significant Stellar support lies at $0.29, representing a potential 24% decline from current levels. This strong support zone has historically provided buying opportunities and could attract value investors if reached.

On the upside, XLM resistance appears at $0.47 as the immediate barrier, followed by stronger resistance at $0.52. These levels correspond to previous rejection zones and will likely require significant buying volume to overcome, particularly given the current bearish momentum and elevated exchange supply.

The XLM/USDT pair's 24-hour trading range of $0.38-$0.39 shows limited volatility, but the Average True Range of $0.03 suggests traders should prepare for potential breakouts in either direction.

Should You Buy XLM Now? Risk-Reward Analysis

The current XLM price presents a complex risk-reward scenario that varies significantly based on trading timeframe and risk tolerance. For short-term traders, the bearish momentum indicators and elevated exchange supply suggest caution, with potential for further downside toward the $0.29 support level.

Conservative investors might consider waiting for clearer oversold signals, particularly if XLM RSI drops below 30 or if the token successfully tests and holds the $0.38 support level with strong volume. The combination of growing network fundamentals and potential oversold conditions could create attractive entry points for patient buyers.

More aggressive traders could consider small position sizes near current levels, setting strict stop-losses below $0.37 to limit downside risk. The risk-reward ratio improves significantly if XLM can reclaim the $0.40 level and break above short-term moving averages.

Long-term investors should note that despite current headwinds, Stellar's growing TVL, expanding user base, and institutional partnerships like VersaBank provide a solid foundation for future growth. The current weakness might represent a healthy correction within the broader uptrend, especially considering XLM remains well above its 52-week low of $0.22.

Conclusion

XLM price faces near-term challenges as technical indicators signal potential weakness and elevated exchange supply creates selling pressure. However, strong network fundamentals and oversold conditions developing across multiple indicators suggest this decline may be setting up attractive entry opportunities for patient investors. Traders should watch the critical $0.38 support level closely over the next 24-48 hours, as a break below could accelerate the decline toward $0.29, while a successful defense might trigger a relief rally toward $0.42 resistance.

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