Tracking Stellar’s Market Trends: Is XLM Poised for a Reversal?

XLM, also known by the name Stellar, has been on a multi-year downtrend, with wild variance in prices along the way. The drops in price come very close after periods of spikes in its short-term bubble risk oscillator (a measure of short-term speculative risk for the asset). The oscillator ranges from 0 to 1, with spikes traditionally above 0.5 indicating higher bubble risks. There were significant spikes in the oscillator in 2017, 2018, 2021, and again in 2025, all lining up with steep price declines in the asset. To illustrate, in 2017, XLM peaked at $0.9 before crashing to $0.1, a 90% drop by 2019. A very similar price action occurred going higher, in 2021, XLM peaked at $0.7, with a crash back to $0.1 by 2023. Recently in 2025, even after a massive run-up to $0.4, XLM crashed back to $0.1, roughly coinciding with a peak in the oscillator at .808 which confirmed the strong bearish momentum. 

Signs of Potential Reversal

Historical price patterns of XLM show that whenever the oscillator increases above 0.5, there is a huge price correction. But a drop in the oscillator below 0.5 along with price stability might show signs of a trend change.

For XLM to escape its past trend of sharp drops, it would have to maintain a price level above $0.4. If this happens in conjunction with a drop in volatility, the asset may enter a more bullish trend.

Price Declines from All-Time Highs (ATH)

The ATH Percentage Drawdown chart gives us further information regarding XLM’s past declines. XLM in 2018 hit a high of $0.9 but by 2019 had fallen more than 90% to $0.1. Something similar happened in 2021 when the token hit $0.7 only to decline 80% by 2022.

The same trend was seen again in 2025, as XLM came close to touching $0.4 before sharply falling to $0.1, an 84.5% fall. This recurring trend of 80%-90% drawdown shows the high volatility and bearish nature of XLM.

But if the asset can hold a price above $0.4 while keeping its drawdown below 50%, this may indicate a change to bullish. Decreasing volatility and a greater degree of price stability would also favor this being the case.

If XLM breaks through $0.289401 under lessened liquidation pressure, it will likely be a precursor to an impending bullish momentum. Under these circumstances, positions above $0.29 would increasingly become alluring to traders pursuing momentum.

Conclusion

Stellar (XLM) remains highly volatile, with price corrections traditionally occurring after highs in the bubble risk oscillator. However, indications of stabilization in drawdowns and lower liquidation risks may be the precursor to a possible recovery. A persistent price above $0.4, along with a drawdown of below 50%, could signal a move towards a bullish trend. Investors need to monitor major liquidity levels and oscillator trends closely to make sound trading decisions.

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