As Bitcoin (BTC) continues its march toward the highly anticipated $100,000 milestone, the broader cryptocurrency sector is regaining upward momentum, with Stellar (XLM) emerging as a standout performer.
Stellar has recently witnessed a meteoric rise, surging over 20% in the past 24 hours to reach a peak of $0.55, its highest level since 2021.
This impressive rally has positioned it among the top gainers in the cryptocurrency market. Over the past month, Stellar has recorded an extraordinary 171% increase, underscoring renewed investor confidence in the asset.
XLM seven-day price chart. Source: Finbold
Adding to the optimism, AI models predict that this bullish trend could persist, projecting further upside potential for XLM by the end of the year.
Key drivers behind Stellar’s rally
A major factor contributing to Stellar’s rise is Grayscale Investments LLC’s Stellar Lumens Trust, which reported a 10% increase in net assets in its 10-K filing for the fiscal year ending September 30, 2024.
Despite prior losses caused by XLM price depreciation and management fees, the addition of 34,875,230 XLM tokens valued at $3,923 led to net asset growth. This announcement has likely reignited interest in XLM, propelling its recent price spike.
However, caution is advised. Stellar’s Relative Strength Index (RSI) has reached a high of 91, signaling overbought conditions. Historically, such extreme RSI levels often precede short-term price corrections.
On the derivatives front, Stellar exhibits strong bullish momentum. According to data from CoinGlass, trading volume has skyrocketed by 78.97%, reaching $10.82 billion, while open interest has risen 32.35% to $400.52 million.
These metrics point to heightened market activity and increased trader confidence in the asset. Furthermore, the Binance Long/Short Ratio of 0.836 indicates a slight short dominance, suggesting that if the bullish momentum persists, a potential short squeeze could force short sellers to cover their positions, propelling prices even higher.
Technical insights and market outlook
Technical indicators further strengthen the case for a bullish trajectory. In a recent analysis, analyst Dark Defender noted that XLM is currently in its third Elliott Wave, advancing toward the critical resistance level of $0.641036.
Stellar price analysis chart. Source: DarkDefender/X
A successful breakout at this level could sustain upward momentum, potentially targeting $2.8444 as the wave structure completes.
While strong buying interest supports this bullish outlook, the overbought RSI suggests that a brief consolidation may occur before further gains. Traders should monitor the $0.641036 resistance closely, as a breakout here could confirm a continuation of XLM’s rally.
AI predictions for XLM by year-end
For a detailed projection of XLM’s potential, Finbold leveraged market data and consulted ChatGPT-4o to analyze Stellar’s prospects as it reached new highs.
Factors affecting Stellar price. Source: ChatGPT/Finbold
AI models predict that Stellar could end the year trading between $0.75 and $1. This forecast is underpinned by strong institutional confidence, robust technical indicators, and surging market activity.
However, the RSI’s elevated level suggests a possible short-term consolidation around $0.40 to $0.50 before a renewed climb.
If bullish momentum persists and resistance levels are breached, Stellar stands to benefit from the broader cryptocurrency rally, potentially achieving the upper range of the forecast and closing 2024 on a high note.
