XLM, the native cryptocurrency of the Stellar blockchain, has captured the spotlight with a remarkable 40% surge in its value during the early days of January 2025. This notable price increase over such a brief period has piqued the interest of major investors and traders within the cryptocurrency sector.
Is Profit Booking Driving XLM’s Market Activity?
Despite the bullish trend, there are growing concerns over potential profit-taking behaviors. According to insights from on-chain analytics firm CoinGlass, a significant number of investors appear to be offloading their XLM holdings onto exchanges. The data highlights a notable inflow of $36.36 million worth of XLM tokens into exchanges around the time the altcoin experienced its price surge.
This influx of tokens onto exchanges suggests a possible sell-off by long-term holders who may have purchased XLM during the previous month’s dip, aiming to capitalize on the current price increase. In the world of cryptocurrency, such inflows are often indicative of impending selling pressure and could potentially lead to a decline in price.
The scenario unfolded as XLM touched a critical resistance level at $0.45. Historically, when the altcoin approached this price point, it underwent a prolonged period of consolidation, and current market behavior seems to echo that pattern. This has led to apprehensions among traders and investors regarding whether XLM will consolidate further or face a potential price decline.
Analyzing XLM’s Current Price Action
Recent price movements suggest that XLM might be entering a consolidation phase near its current level, as it appears to be significantly extended. Consolidation phases often attract new investors, traders, and long-term holders who see potential for future rallies, thereby potentially fortifying XLM’s position for another upward movement.
Forecasting XLM’s Price and Momentum
Technical analysis by experts indicates that if XLM can surpass this resistance level and close with a daily candle above $0.465, the cryptocurrency could experience a further 30% surge, reaching its 52-week high. However, if it fails to break past this threshold, further consolidation and price distribution are anticipated.
As of the latest market update, XLM is trading close to the $0.45 mark, having seen a price increase of over 4.5% in the last 24 hours. Interestingly, during this period, trading volume has decreased by 40%, which might suggest a drop in trader and investor participation, potentially due to the price nearing a key resistance level and the market entering a consolidative state.
Overall, while XLM shows promise, market participants remain cautious, watching closely to see whether it will break through resistance or enter a prolonged consolidation phase.
