XLM Token Price May Experience a Correction

Stellar (XLM) has experienced a 50% price surge over the past 24 hours, making it the top-performing asset during this period. This surge can be attributed to the recent 10-K filing submitted by Grayscale Investments LLC for its Grayscale Stellar Lumens Trust.

At press time, the altcoin trades at $0.45, its highest price point since 2021. However, readings from its daily chart hint at a possible short-term decline. Here is how.

Stellar Lumens Trust Sees Spike in Net Assets

On Friday, Grayscale Investments LLC’s Grayscale Stellar Lumens Trust (XLM) submitted its 10-K filing for the fiscal year ended September 30, 2024. It noted that the trust recorded a 10% uptick in its overall net assets during the financial year considered. 

A 10-K filing is an annual report that publicly traded companies in the US are required to submit to the Securities and Exchange Commission (SEC). It provides an overview of the company’s financial performance. It includes the entity’s audited financial statements, business operations, risk factors, and management discussion and analysis.  

According to the report, the Grayscale Stellar Lumens Trust (XLM), an investment vehicle offering investors exposure to XLM, faced losses. This was due to the token’s price depreciation during the period considered and the fees paid to the trust’s sponsors. However, these losses were offset by the 34,875,230 XLM tokens valued at $3,923 added to the trust. This resulted in a net increase in the trust’s overall assets.

XLM Reacts To the News

The positive sentiment around this filing has resulted in a spike in XLM’s value. Over the past 24 hours, the token’s price has surged 58%, making it the market’s top gainer. As of this writing, the altcoin trades at $0.45, a price last observed in November 2021. 

However, readings from its daily chart suggest that this rally may not continue as XLM has become overbought among market participants. For example, its Relative Strength Index (RSI) is at an all-time high of  92.54 at press time. 

RSI measures an asset’s oversold and overbought market conditions. It ranges between 0 and 100, with values above 70 indicating that the asset is overbought and due for a correction. On the other hand, values below 30 suggest that the asset is oversold and may witness a rebound. XLM’s RSI reading of 92.54 suggests that it is significantly overbought and is at risk of a pullback. 

Furthermore, XLM’s price trades above the upper line of its Bollinger Bands indicator, confirming the likelihood of a price correction. 

The Bollinger Bands indicator measures market volatility and identifies potential buy and sell signals. It consists of three main components: the middle band, the upper band, and the lower band. 

When the price trades above the upper band, it suggests that the asset is overbought. This means that the asset’s price has moved significantly higher than its average price and is at risk of a pullback in the near term.

XLM Price Prediction: Token May Shed Recent Gains

Once buyer exhaustion sets in, XLM’s price is at risk of shedding some of its recent gains. According to its Fibonacci Retracement tool, if this happens, its price target will be the support level formed at $0.35. If the bulls fail to defend this level, the token’s price may drop further to $0.23. 

On the other hand, if buying pressure intensifies, the XLM token price will continue its uptrend and attempt to breach $0.52, a high it last reached in May 2021.