XLM price made a strong comeback on November 27, forming a bullish engulfing candlestick pattern.
Stellar (XLM), the second-largest payments-focused network after Ripple (XRP), hit an intraday high of $0.5311. That rebound reversed a two-day selloff that pushed it into a local bear market.
Stellar’s rally coincided with a broader rebound in the crypto market, as Bitcoin (BTC) and other major coins also rebounded.
Basically, Stellar’s DeFi ecosystem continued to perform well this week. According to DeFi Llama, the total value of Stellar locked in DeFi has reached an all-time high of over $56 million.
Total assets in the Stellar ecosystem, including those in the real-world asset tokenization sector, are approaching $300 million. This growth is driven by the Franklin Templeton OnChain US Government Money Fund, which has accumulated over $400 million in assets.
Other prominent decentralized applications in the Stellar ecosystem include DEX platforms such as LumenSwap, Aquarius Stellar, and Scoputy.
Stellar’s price increase was also supported by signs of regulatory clarity in the United States. Recently, a court ruling ruled that OFAC exceeded its authority in sanctioning Tornado Cash, noting that standalone software cannot be classified as property.
US courts have issued rulings favorable to the crypto industry in recent months. In 2023, a judge ruled that XRP was not a financial guarantee and Ripple was ordered to pay only $250 million, a fraction of the $2 billion sought by the SEC. These developments, along with Trump’s re-election, have sparked speculation about a potential XLM spot ETF in 2025.
XLM price forms bullish engulf
In an article published last week, we predicted that Stellar price would suffer a sharp reversal, which happened. Stellar price fell to $0.4168 on November 26, a 35% drop from its highest level this year. It has since formed a bullish engulfing candlestick pattern, a strong reversal indicator characterized by a large bullish candlestick completely covering a previous bearish candlestick.
If Stellar Lumens price closes above $0.50, it would validate the engulfing trend and indicate further gains. In this scenario, the price could retest its yearly high of $0.6370, the high reached earlier this month.
However, there is a risk that this bounce could be a dead cat bounce, a temporary rally during a sell-off. This bearish view would gain traction if the price falls below $0.4168.
