Stellar (XLM) is drawing attention from traders as it forms the right shoulder of a potential head-and-shoulders reversal pattern.
Prominent analyst Ali Martinez highlighted the setup, suggesting that a confirmed breakout could set the stage for strong upside momentum in the weeks ahead.
At the time of writing, XLM trades at $0.4119, down 3.6% over the past week, with a market cap of $12.91 billion. Despite short-term weakness, technical indicators show resilience around the key $0.403 support level, where trading volumes spiked 130% earlier this week.
A major catalyst on the horizon is Stellar’s upcoming Protocol 23 upgrade, which goes to a mainnet vote in late August 2025. The upgrade will introduce parallel execution for Soroban smart contracts, enabling throughput of up to 5,000 transactions per second while cutting fees.
This development could strengthen Stellar’s appeal as a base layer for DeFi and real-world asset (RWA) projects, much like Ethereum’s London hard fork in 2021 that drove a 15-30% rally. If adoption follows, XLM could see renewed demand as the network’s gas token.
Stellar is also pushing deeper into tokenization. Its recent partnership with Archax has brought a $25 million Aberdeen money market fund on-chain, while Visa’s stablecoin integration continues to enhance Stellar’s institutional reach.
However, not all the news has been bullish. On August 18, whale liquidations triggered a 6% drop in XLM’s price, underscoring ongoing volatility. Still, the longer-term growth narrative remains tied to RWAs, a market projected to reach $1.3 trillion by 2030.
If XLM breaks decisively above the $0.44 neckline, analysts see the potential for a move toward $0.50, with further extensions toward $0.65 and even $0.80 if momentum builds ahead of the Protocol 23 upgrade. Conversely, failure to hold above the $0.40 support could see XLM revisit the $0.36-$0.38 range before buyers step back in.
XLM’s recent performance shows a mix of caution and opportunity. Technical traders are watching the head-and-shoulders structure closely, while fundamentals suggest upcoming upgrades and partnerships could drive renewed adoption.
With Ali Martinez pointing to a bullish reversal setup and Stellar preparing its most ambitious network upgrade yet, the coming weeks may prove pivotal in shaping the trajectory of XLM.
