Stellar (XLM) Price Prediction: Mean Reversion Could Trigger a 40% Big Dump, Stablecoin Supply Surge "Not Completely Accurate"

Stellar (XLM) has surged over 78% in a single month, with today's (16) Asian early market reporting at 0.4598 USD. As the bull market in the Crypto Assets market fades, the price of XLM has weakened its upward momentum over the past two consecutive days. Analysts warn that mean reversion could lead to a 40% big dump for the Token, and the data regarding its stablecoin supply surge may not be entirely accurate.

XLM mean reversion may trigger a 40% big dump

The daily chart shows that the price of XLM exhibited a parabolic trend last week, reaching a high of $0.5145 as the rebound in the Crypto Assets market intensified. This surge has pushed its price significantly above recent moving averages, while oscillators such as the stochastic indicator and the relative strength index (RSI) have reached extremely overbought levels.

The main risk facing XLM's price is mean reversion, which refers to asset prices deviating too far from the moving average, but then returning to levels close to the moving average.

Taking XLM as an example, its current price is 0.4500 USD, which is far above the 50-day and 100-day moving averages (which are 0.2900 USD and 0.2837 USD respectively). Therefore, the Token may big dump 40% to approach these two averages.

XLM experienced a mean reversion in November last year, soaring nearly 500%, and deviating from its moving average. Subsequently, XLM gradually fell until a few months later when it made up for this gap.

Another risk facing the price of XLM is that it has significantly deviated from the upper side of the descending channel connecting the highs and lows since last December.

In most cases, after a strong breakout, assets tend to pull back and retest previous resistance levels. This situation is referred to as the "breakout-retest" pattern, which is usually a highly bullish signal.

Therefore, the most likely scenario is that the XLM price falls by about 40%, then recovers to a bullish trend. If the price of Stellar coin breaks through this year's high of $0.5155, then the previous bullish forecast will be invalid.

(Source: Trading View)

XLM open interest contracts fall and stablecoin data is chaotic

Another potential catalyst for the big dump in XLM price is that the growth of its stablecoin has not materialized as most analysts predicted. Data from DeFiLlama shows that the supply of Stellar's stablecoin surged to over $652 million last week, up from $170 million in May.

However, a closer look reveals that the surge in stablecoin supply is not entirely accurate. This growth is due to the fact that the data aggregation platform simply moved the Franklin Onchain Money Market Fund (, which has $441 million in assets, into the stablecoin category of Stellar.

Excluding the fund, the Stellar network holds stablecoins worth $185 million, of which USDC accounts for $180 million and EURC accounts for $1.92 million.

Due to the decline in futures open interest, the price of XLM may experience a big dump. Coinglass data shows that open interest dropped from $520 million the previous day to $495 million on Tuesday. In most cases, when open interest peaks, Crypto Assets prices start to fall.

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(Source: Coinglass)