After months of sluggish price action and persistent selling pressure, Stellar (XLM) has finally broken out of its bearish streak, offering a much-needed boost for investors who have been waiting for a turnaround. The token had been stuck in a downward trend since November 2024, falling over 65% during that period. But this week brought new hope as XLM surged by 8.5% in just 24 hours, climbing to around $0.284 and officially breaking out of the long-standing bearish channel.

The breakout has injected fresh optimism into the market. It also came with a noticeable spike in trading activity, as XLM’s volume jumped by over 25% during the same period. This increased activity suggests that both retail traders and larger market participants are beginning to re-engage with the asset. For many, this could be the early sign of a much-anticipated rally.

Backing this renewed momentum is a strong shift in trader sentiment. On Binance, a majority of the top XLM traders have taken long positions, with data showing that nearly 65.4% of them are betting on further upside. Only 34.6% are holding short positions, signaling that confidence is steadily shifting toward the bullish side. This pattern is consistent with what you’d expect during the early phase of a trend reversal, especially after such a prolonged decline.

Further insight from market data platforms reveals that leveraged traders have positioned themselves around key price zones. The $0.2558 level, which previously acted as support, now holds a substantial amount of long positions totaling approximately $6.37 million. On the resistance side, near $0.285, around $1.63 million in short positions have been established. If XLM continues to hover around these levels or breaks higher, we could see a round of liquidations that pushes the price even further.

Another sign of bullish potential is the movement of tokens off exchanges. Over the last 24 hours, around $1.19 million worth of XLM has been withdrawn from centralized exchanges. This type of outflow typically signals accumulation by investors who plan to hold their assets rather than trade them immediately. When coins leave exchanges in large amounts, it often reduces sell pressure and hints at growing confidence among holders.

From a technical analysis standpoint, Stellar appears to be building strength for a larger upward move. The recent breakout above the descending channel is a key bullish signal. A successful daily close above $0.275 further confirms this breakout, making it more than just a temporary price spike. Historically, such breakouts can lead to powerful follow-through moves if supported by volume and broader market conditions.

Analysts suggest that if XLM can stay above the $0.275–$0.28 range, there’s a realistic chance for the price to rally as much as 30% in the coming weeks. That would bring the token closer to the $0.375 zone—a level that previously acted as both resistance and a key psychological barrier. However, this optimistic outlook hinges on XLM holding above the $0.26 support level. If the price falls below that line again, it could re-enter bearish territory, delaying any meaningful recovery.

For now, the market is watching closely. The recent breakout has fueled new interest and opened the door for a potential trend reversal. While caution remains warranted, especially in such a volatile space, Stellar’s recent performance shows signs of a project beginning to regain traction. If trading volume continues to grow, and investor sentiment holds steady, XLM could be on the verge of its next major leg up.