Why is Stellar's XLM up by over 50% this week?

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Why is Stellar's XLM up by over 50% this week? XLM rallied after US financial giant DTCC announced a partnership with the Stellar Network, but it still risks a sharp downside in the coming weeks. Stellar’s native token, XLM, has rallied more than 50% this week, outperforming the broader crypto market, which has declined by nearly 5% in the same period. Key takeaways: - US financial giant DTCC announced it would integrate its tokenized securities platform with the Stellar Network. - XLM rallied by over 50% after the announcement, but risks a sharp downside in the coming weeks. DTCC partnership fuels XLM rally XLM's price surged after a major institutional partnership announcement by the Depository Trust & Clearing Corporation (DTCC), a US financial giant that clears and settles $10 trillion to $12 trillion in securities transactions daily. In a Wednesday press release, the firm revealed plans to integrate its tokenized securities platform with the Stellar network, targeting a launch in the first half of 2027. XLM/USD daily chart. Source: TradingView The move builds on DTCC’s tokenized trades, launched in July 2026, based on its multi-chain strategy for tokenized asset issuance, reporting, corporate actions, and settlement. XLM rallied 51.75% after the DTCC announcement and traded for as high as $0.224 on Friday, its highest level since January. Trading volumes rose sharply alongside the upside move, suggesting that many buyers stepped in. Short squeeze helped fuel XLM price rally A crowded short trade appears to have also amplified the XLM upside move. Since May 28, Stellar's short liquidations have reached $12.41 million, compared with $6.82 million in long liquidations, according to CoinGlass. Stellar total liquidations chart vs. XLM price. Source: CoinGlass That means bearish traders suffered nearly 1.8 times more forced closures than bullish traders as XLM surged from around $0.15 to as high as $0.224. XLM open interest nearly doubled during the same period, reaching $292.11 million on Friday. That shows traders added heavy leverage as the rally unfolded, instead of simply closing positions. Stellar open interest vs. XLM price. Source: CoinGlass At the same time, XLM’s OI-weighted funding rate dropped to around -0.0270%, its deepest level since April, even as the price climbed. Stellar's OI-weighted funding rate vs. XLM price. Source: CoinGlass Negative funding means short traders paid long traders to keep their positions open, showing that bearish positioning remained crowded during the breakout. When the price rises against heavily leveraged shorts, exchanges force bearish traders to buy back the token to close their trades. That forced buying adds fresh upward pressure, leading to a "short squeeze." XLM’s PayPal and Trump rallies raise sharp pullback risks Stellar’s latest breakout mirrors earlier XLM rallies that ended with steep corrections. In November 2024, XLM surged by roughly 640% after Donald Trump's re-election as the US president. However, the rally quickly lost momentum, with XLM later dropping by about 68.6% from its local peak. XLM/USD two-week chart. Source: TradingView A similar pattern played out in July 2025, when PayPal's stablecoin launch on Stellar and growing excitement around the Protocol 23 upgrade helped XLM rally by around 140%. However, the upside was short-lived, with the XLM/USD pair later correcting by roughly 73.8%. The risk now is that the DTCC-driven rally follows the same pattern. XLM is running hard into long-term resistance XLM’s latest rally has pushed the token into a major long-term resistance zone, raising the risk of a pullback or consolidation. As of Friday, XLM was trading near the $0.198–$0.224 ceiling area, and a zone that also overlaps with three exponential moving averages (EMA), namely the 50-week EMA (red) near $0.2216, 100-week EMA (purple) near $0.2281 and 200-week EMA (blue) near $0.2083. XLM/USD weekly price chart. Source: TradingView Failure to break above the resistance confluence, which analyst MAGIC called "too strong for the first test," risks sending the XLM price toward the $0.112–$0.136 area, down 30%–40% from current levels, by June or July. The downside target area aligns with the lower trendline of XLM's prevailing descending channel pattern. Related: Altseason is dead, expect shorter cycles and ‘violent’ rotations: Crypto exec Conversely, a decisive breakout above the resistance area raises the odds of XLM rallying toward the channel's upper boundary near the $0.28–$0.30 range by June or July. That's up roughly 40% from the current price levels. More on the subject

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