What to Know:
- XLM dips 7.65% to $0.35; $0.35 support critical for next breakout.
- Altcoin weakness, technical rejection, and Protocol 23 vote drive short-term volatility.
- LayerZero integration brings cross-chain access and long-term growth potential.
Stellar (XLM) has recently dropped to $0.35. If this support holds, XLM could stabilize and gain strength until it breaks out at $0.50. XLM fell 7.65% in the last 24 hours, which is worse than the rest of the crypto market, which fell about 4%.
Stellar is going down because of a mix of technical problems, a general weakness in altcoins, and uncertainty about its upcoming Protocol 23 network upgrade. Even though there are problems in the short term, the long-term outlook is still good, especially with the LayerZero integration coming to Stellar. This could open up new opportunities for both developers and users.
LayerZero Integration
Stellar recently announced that LayerZero will be joining its ecosystem, which adds to the excitement. LayerZero lets 143 blockchains work together in a way that is truly native. This means that developers can build apps once and use them anywhere without any problems or bridges.
This could lead to new financial products, privacy strategies, and real-world use of DeFi. This integration should help partners like PayPal, OndoFinance, and Paxos. LayerZero’s features will probably help Stellar’s growing ecosystem of smart wallets and apps, such as BeansApp, SomosMeru, and AirtmInc. This will give people access to some of the most popular assets in the world.
Protocol 23 Upgrade
The fact that XLM is getting a new network upgrade called Protocol 23 is one reason why people are being careful with it. The upgrade includes improvements to smart contracts and was deployed on the testnet on September 4. The mainnet vote, which runs from September 3 to 10, has made traders cautious because they are taking into account possible execution risks.
In the past, big upgrades have caused people to “sell the news.” On-chain data shows that fewer big holders are actively trading. Wallets holding more than 1 million XLM have dropped 12% since September 1. If the mainnet activation goes well, people’s feelings could change quickly, especially if Soroban smart contracts bring new DeFi activity to the network.
Technical Rejection
XLM fell below important moving averages, such as its 7-day and 30-day simple moving averages, which are $0.387 and $0.379, respectively. The Relative Strength Index (RSI) is at 43.08, which means that the market is going down. The price also couldn’t stay above the 23.6% Fibonacci retracement level of $0.405, which caused traders to use stop-loss orders.
Many investors sold their positions because of this technical breakdown, which added to the selling pressure. Right now, the $0.35–$0.36 zone is an important support level. If XLM closes below this level, it could drop even more, down to $0.33. The MACD histogram is something that market watchers are keeping an eye on because it could show that bearish momentum is picking up if it turns negative.
The Altcoin Market
Stellar’s drop isn’t happening by itself. Bitcoin’s dominance rose 0.74% to 57.81%, which means that money has been moving out of altcoins and into Bitcoin. The Altcoin Season Index dropped 10.14% in 24 hours, which shows that people are less interested in risky assets. The trading volume for XLM went up by 97% to $309 million, mostly because of selling pressure.
XRP and SEI also lost a lot of value, which shows that investors are moving money out of smaller cryptocurrencies. This week, Stellar’s correlation with Bitcoin has gone up to 0.89, which means that altcoin prices are now moving more closely with Bitcoin. XLM might not have to sell as much if Bitcoin stays stable.
Conclusion
XLM’s recent drop is due to technical issues, a weak altcoin market, and uncertainty about Protocol 23 in the short term. If the $0.35 support holds and the mainnet upgrade goes well, though, a breakout toward $0.50 could be on the way. LayerZero integration is coming soon, and Stellar is making itself a more flexible platform for developers and users. This gives investors a reason to stay positive even though the market is volatile in the short term.
Also Read: $1.7B Wiped Out in 24H as 404K Traders Liquidated, ETH and BTC Lead
