The fundamentals are positive but the price is weak. Has the reversal signal for XLM appeared?

Over the past three months, XLM has experienced a cumulative correction of 34%, with prices hovering at low levels, but on-chain data tells a different story. The value of RWA assets in the Stellar ecosystem has approached the $1 billion mark, growing over 10% in the short term, and funds have not withdrawn despite the price decline. Meanwhile, a clear inverse head and shoulders pattern has emerged on the technical front. With positive fundamentals, continuous capital inflows, and technical support signals, do these indicators suggest that XLM’s reversal opportunity has arrived?

Contradiction Between RWA Growth and Capital Inflows

The Stellar network is undergoing an interesting divergence. Prices are under pressure, but real usage data continues to improve.

According to on-chain data, the actual weighted asset value related to real-world assets in the Stellar ecosystem has approached $986 million, rising from about $890 million since late December 2024, an increase of over 10% in a short period. This growth may seem modest, but the key point is—this is happening against the backdrop of declining XLM prices.

Typically in a bear market, investors withdraw funds due to falling prices, but the data from the Stellar ecosystem is the opposite. Capital continues to flow in, and RWA scale is expanding, indicating increasing market recognition of Stellar’s fundamentals.

Technical Pattern: Clear Signal of Inverse Head and Shoulders

From a technical perspective, the daily chart of XLM is forming an inverse head and shoulders pattern, a classic bottom reversal signal.

The pattern is clearly defined: the left shoulder formed in November 2025, the head appeared in late December, and recent pullbacks are gradually outlining the right shoulder. This pattern usually appears near a bottom, reflecting diminishing selling pressure and early buying interest.

Key price levels are as follows:

Once the daily close effectively holds above the neckline (about 12% above the current price), the breakout will be confirmed technically. If XLM closes above $0.254, the technical target points toward around $0.33. Conversely, breaking below $0.223 would weaken the current bullish structure.

Capital Flow Indicators Reinforce Bullish Structure

The credibility of the technical pattern depends on capital flow indicators. The good news is that the Chaikin Money Flow (CMF) and Money Flow Index (MFI) are both signaling positive momentum.

During the price correction, CMF remained above zero, indicating no significant capital outflow. Meanwhile, MFI stayed high during previous lows, reflecting typical accumulation behavior at lows. This buying activity provides support for the price, and as long as key levels are not broken, the rebound basis remains relatively solid.

In other words, despite the low prices, buyers are accumulating on dips, a typical feature before a reversal.

Ecosystem Expansion as Long-term Support

Beyond technical and capital flow signals, Stellar’s ecosystem applications are expanding, providing long-term support.

According to recent reports, Stellar has been classified by Grayscale as part of the “Currency” tier in the crypto pyramid, alongside Litecoin, Ripple, and others. Additionally, BNY Mellon has listed Stellar as a “special” blockchain infrastructure protocol. These institutional recognitions enhance Stellar’s foundational status.

On the application front, the stablecoin payment card ecosystem is rapidly developing. Payment startups like Rain have integrated Stellar into their supported blockchain networks, and stablecoin cards are expected to become a core theme in crypto payments by 2026. Furthermore, the STBL protocol plans to extend the native USST minting to high-performance chains like Stellar in Q1. These developments indicate a broadening of Stellar’s application scenarios and increasing ecosystem vitality.

Development activity data also reflects this—Stellar’s development activity has increased by 71%, indicating an active ecosystem.

Reversal Possibility and Key Watchpoints

Combining fundamentals, technicals, and ecosystem expansion, XLM indeed has a basis for a reversal. But whether the reversal is truly underway depends on the following key points:

1. Technical: Can $0.254 effectively break through? This is the first step to confirming a reversal.
2. Fundamentals: Will RWA continue to grow? Can capital inflows persist?
3. Ecosystem: Will new scenarios like payment cards and cross-chain applications generate real demand?

My personal view is that current technical patterns and capital flow indicators do give bullish signals, but confirmation from price action is necessary. If XLM can break above $0.254 in upcoming trading sessions, the rebound toward $0.33 will have a solid technical basis. But if it falls below $0.223, the bullish structure will be invalidated.

Summary

Stellar is at an interesting juncture: fundamentals are improving, capital continues to flow in, technical patterns are clear, and ecosystem applications are expanding. Yet, the price remains at low levels, which is typical before a reversal.

With RWA approaching $1 billion, supported by capital flow indicators, and the inverse head and shoulders pattern forming, these factors provide a potential foundation for a reversal. The key is whether the price can realize the positive signals from on-chain fundamentals. The next focus is on the $0.254 neckline—if it is effectively broken, the confirmation of a reversal will significantly increase.