XLM Price Forms Rare Pattern as Stellar DeFi TVL Reaches Record High

The price of Stellar (XLM) has shown signs of a strong recovery, staging a notable comeback on November 27. The rebound resulted in the formation of a bullish engulfing candlestick pattern, which is often seen as a signal of a potential price reversal. XLM surged to an intraday high of $0.5311, marking a reversal of the two-day sell-off that had pushed it into a local bear market.

This recovery coincided with a broader rebound in the cryptocurrency market, where Bitcoin and other major cryptocurrencies also saw price increases. Stellar’s recent performance also reflects positive developments in its decentralized finance (DeFi) ecosystem. According to DeFi Llama, Stellar’s total value locked (TVL) in DeFi reached a record high of over $56 million. Furthermore, the total assets within the Stellar ecosystem, which includes projects in real-world asset tokenization, are nearing $300 million. A significant contributor to this growth is the Franklin Templeton OnChain US Government Money Fund, which has accumulated more than $400 million in assets.

Other notable decentralized applications (dApps) within the Stellar ecosystem include DEX platforms such as LumenSwap, Aquarius Stellar, and Scoputy. Stellar’s price increase has also been supported by signs of regulatory clarity in the U.S. Recently, a court ruling determined that the Office of Foreign Assets Control (OFAC) had exceeded its authority by sanctioning Tornado Cash, stating that autonomous software cannot be considered property. This decision, along with favorable rulings for the cryptocurrency industry in recent months (such as the decision that XRP is not a security), has fostered a more optimistic outlook for the market, with speculation rising over the potential launch of a spot XLM ETF by 2025.

The price action of Stellar has been noteworthy, as it recently experienced a sharp decline to $0.4168 on November 26, a drop of 35% from its highest level this year. However, the formation of the bullish engulfing candlestick pattern on November 27 suggests a potential reversal. This pattern occurs when a large bullish candlestick completely engulfs the preceding bearish candlestick, signaling a shift in market sentiment.

If Stellar’s price can close above $0.50, this would confirm the bullish engulfing pattern, potentially paving the way for further gains. In such a scenario, XLM could target its year-to-date high of $0.6370, which it reached earlier this month. However, there is also a risk that the current rebound could be a “dead cat bounce” — a temporary recovery during a broader downtrend. This bearish outlook would gain strength if the price falls below $0.4168, suggesting a continuation of the downtrend.

In summary, while XLM’s price has shown bullish signs with its recent recovery, there is still uncertainty about the sustainability of this trend. The key level to watch is $0.50, as a close above this could signal further upside, while a drop below $0.4168 would suggest a return to bearish momentum.