XLM price forms a rare pattern as Stellar DeFi TVL hits record high

XLM price made a strong comeback on November 27, forming a bullish engulfing candlestick formation.

Stellar (XLM), the second largest payments-focused network after Ripple (XRP), rose to an intraday high of $0.5311. This rebound reversed two days of selling that pushed it into the local bear market.

Stellar’s recovery coincided with a broader recovery in the crypto market, with Bitcoin (BTC) and other major cryptocurrencies also bouncing back.

Fundamentally, Stellar’s DeFi ecosystem continued to perform well this week. According to DeFi Llama, Stellar’s total value locked in DeFi has reached a record high of over $56 million.

Total assets in the Stellar ecosystem, including those in the Real World Asset tokenization industry, are approaching $300 million. This growth is driven by the Franklin Templeton OnChain U.S. Government Monetary Fund, which has accumulated over $400 million in assets.

Other notable decentralized applications in the Stellar ecosystem include DEX platforms such as LumenSwap, Aquarius Stellar, and Scoputy.

Stellar’s price rise was also supported by signs of regulatory clarity in the U.S. A recent court ruling found that OFAC overstepped its authority in sanctioning Tornado Cash, noting that autonomous software cannot be classified as property.

US courts have made positive decisions for the crypto industry in recent months. In 2023, a judge ruled that XRP was not a financial security and Ripple was ordered to pay only $250 million; this was a tiny fraction of the $2 billion the SEC was seeking. These developments, along with Trump’s re-election, have increased speculation about a potential spot XLM ETF in 2025.

XLM price forms bullish Stellar price chart | Source: crypto.news

In an article published last week, we predicted that the Stellar price would experience a sharp reversal, and it happened. Stellar’s price fell 35% from this year’s high to $0.4168 on November 26. It has since formed a bullish engulfing candlestick pattern, which is a strong reversal indicator characterized by a large bullish candlestick that completely covers the previous downtrend.

If Stellar Lumens price closes above $0.50, it will confirm the engulfing pattern and point to more gains. Under this scenario, the price could retest its year-to-date high of $0.6370, which is the peak reached earlier this month.

However, there is a risk that this recovery will be a dead cat bounce, a temporary recovery during the sell-off. This bearish view will gain momentum if the price breaks below $0.4168.