Why did Stellar Price fall down by 7% in the past few days?

Key Takeaways:

• The Stellar (XLM) price has risen by nearly 20% in the past few days and despite a bearish action, a strong rebound has kept up the bullish momentum
• The price in the longer time frame appears to be pretty bullish and hence may maintain a notable upswing in the coming days
• The whales appear to have part away from XLM, but the rise in the activity of inactive addresses flash massive bullish signals

Stellar (XLM) price has been bullish in the past few days and gained significant value as the markets turned greener during the weekend. However, the price on the last trading day witnessed more than 7%, but the bulls respected the support and ignited a rebound. The price has flipped but the bearish influence has not wanned yet. While the fundamentals are becoming stronger every day, will the price be positively impacted?

In the past few days, the crypto payment specialist has rolled out a couple of upgrades. Stellar recently collaborated with Polkadot and its sister network Kusama via Spacewalk bridge. The newly built bridge aims to connect the two ecosystems with Stellar’s fiat on-ramps worldwide. The bridge is built by Polkadot Parachain auction winner Pendulum.

The bridge between Stellar and Polkadot aims to connect fiat currency and stablecoin and is live on Kusama and may go live on Polkadot’s mainnet in the next 2-3 weeks. While the traditional financial systems have been shaken up a lot, emerging technologies like Stellar may thrive with their robust fundamentals in the coming days.  

Read More: Polkadot Price Prediction

Stellar Token Technical Overview

Source: Tradingview

• The XLM price has been under the bullish influence since the beginning of the year and the recent reversal from the bearish captivity validates the claim
• During the last trading day, the price had dropped below the lower trend line as it was trading within an ascending triangle
• The price has rebounded as the bulls are trying hard to hold the price within the bullish range
• Therefore, a significant upswing may continue for the next few days as the RSI has displayed a bullish divergence and may rise toward the peak of the consolidation. Post to which a bullish breakout may be imminent.

Stellar Token On-Chain Analysis

Stellar MVRV Ratio

Source: Coinmetrics

The MVRV ratio of a token is the comparison between market capitalization and realized capitalization to get a fair value. The fair value of the token indicates whether the price of the token is undervalued or overvalued. A lower MVRV ratio indicates that the price is undervalued which also attracts investors and liquidity which mounts the buying volume over the platform, impacting the price positively. 

Meanwhile, the MVRV ratio has spiked in the past 24 hours, being extremely overvalued, as the traders may be extremely in profit. Therefore, this also raises the possibility of extracting some profits that may drag the price slightly lower. Hence a minor pullback may be fast approaching which could be short-lived. 

Stellar Active Supply

Source: Coinmetrics

The active supply measures the number of tokens transacted at least once over a given period. Usually, the cryptos which have held for a longer time instead of trading could impact the price largely. A decrease in the ratio of these inactive supplies indicates the end of the bull run. The rise in the metrics also indicates that the traders have shifted their focus over the token which may increase the volatility.

Presently, the active supply of Stellar has spiked massively, indicating a huge number of inactive tokens have transacted in the recent past. Hence, the rise in the volatility has uplifted the XLM price and bought within the bullish circumference.

Additional Read: USDC Stablecoin Depeg

Stellar Supply in Top 1% Address

Source: Coinmetrics

The supply in the top 1% address is nothing but the balance reserves held by the whales. Whales usually hold nearly 1% or more of the total supply, whose move is closely observed by the retail traders and also followed in large cases. These top addresses accumulate the tokens before the beginning of the bull market and hence it is considered a bullish indicator if the accumulation surges. 

Woefully, the supply on the top 1% addresses has dropped heavily since the beginning of the year as the whales do not appear to be in the mood to accumulate the tokens. However, the price is expected to keep up its volatility as more tokens are believed to remain in active circulation instead of dormant accumulation. 

Concluding Thought!

Stellar Lumens(XLM) has displayed a significant recovery in the recent past as the fundamentals are growing stronger. With the new upgrades and collaborations, the price is believed to remain under bullish captivity as the indicators like MVRV, active supply, etc are bullish. Moreover, the whales are not accumulating and letting out more tokens to trade which may keep the platform active.