Stellar Lumens price has crashed into a bear market this year, mirroring the performance of most cryptocurrencies. This XLM crash, however, could be about to end after it formed a highly bullish pattern and the stablecoin market surged.
Stellar Lumens to Benefit from the Soaring Stablecoin Supply
There are signs that Stellar’s network is gaining traction among users. One of the best metrics that illustrates this is the surging stablecoin supply on the network.
DeFi Llama data shows that the stablecoin supply in the network stands at over $630 million, up from the year-to-date low of $145 million. Its stablecoin supply stood at over $208 million on the same day last year.
A deeper dive into the stablecoin supply on Stellar reveals that the Franklin Onchain US Government Fund (FOBXX) holds the largest market share, with over $459 million in assets. It is followed by USD Coin (USDC), which has over $166 million in assets, and EURC. Stellar’s stablecoin holders have jumped by 3% in the last 30 days to over 526,000.
More data shows that Stellar’s total value locked (TVL) in the decentralized finance (DeFi) space has continued doing well, with its value jumping to a record high of over $89 million. This is a strong figure, as Stellar had a TVL of $35 million at the start of the year.
Stellar, thanks to FOBXX, has become the fourth-largest player in the RWA industry, following Ethereum, ZKSync, and Aptos, and this trajectory is expected to continue in the coming months.
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XLM Price Technical Analysis
The daily chart shows that the Stellar price has been in a downtrend since it peaked at $0.6372 in November last year. It has plummeted by over 61% from that level to its current position as of July 8.
As a result, the XLM price has moved below the 50-day and 100-day moving averages, which is a bearish factor. However, on the positive side, it has formed a double-bottom pattern at $0.2167 and a neckline at $0.3345. A double-bottom results typically in a bullish breakout.
Further supporting the bullish outlook is the Percentage Price Oscillator (PPO), whose two lines have formed a bullish crossover and are now pointing upwards.
Therefore, more gains are likely to rebound as bulls target the key resistance level at $0.3344, which is up by over 35% from the current level.
However, there is a caveat regarding the XLM price, in that the double bottom could also be interpreted as an inverse cup-and-handle, a popular bearish continuation pattern.
If this pattern is correct, then the ongoing consolidation is part of the handle section. As such, it may drop to $0.10 in the coming days if it loses the support at $0.2167.
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