Why is Stellar’s XLM up over 50% this week?
Stellar's native token, XLM rallied more than 50% this week, outperforming the broader crypto market, down 5% over the same period.
Main Receptors:
US financial giant DTCC has announced that it will integrate its tokenized security platform with the Stellar Network. XLM has rallied more than 50% since the announcement, but risks a major fall in the coming weeks.
DTCC partnership fueled XLM's rally.
XLM's price rose after the announcement of a major institutional partnership with the Depository Trust & Clearing Corporation (DTCC), a giant US financial institution that clears and facilitates between $10 trillion and $12 trillion of securities transactions every day.
In a press release Wednesday, the firm said it plans to integrate its crypto-storage platform with the Constellation network, targeting a launch in the first half of 2027.
XLM/USD Daily Chart. Source: TradingView
The move builds on DTCC's tokenized transaction launched in July 2026, with its multi-chain strategy for tokenized asset issuance, reporting, corporate actions and settlement.
XLM surged 51.75% after the DTCC announcement and traded as high as $0.224 on Friday, its highest level since January. Alongside the uptrend, trading volumes have increased significantly, suggesting that more buyers have entered.
A short squeeze helped fuel XLM price rally.
Busy short trading seems to have boosted XLM's upward movement. As of May 28, Stellar's short liquidity reached $12.41 million, compared to long liquidity of $6.82 million, according to CoinGlass.
Stellar Total Liquidity Chart with XLM Price. Source: CoinGlass
This means that when XLM went from $0.15 to $0.224, bear traders experienced 1.8 times more forced closures than bull traders.
XLM open interest nearly doubled over the same period to $292.11 million on Friday. That shows that when the rally opened, traders added more energy than simply closing positions.
Stellar open interest with XLM price. Source: CoinGlass
At the same time, XLM OI's weighted funding ratio fell to around -0.0270%, its deepest level since April, even as prices rose.
Stellar OI-Balance funding rate vs. XLM price. Source: CoinGlass
Negative funding means that short traders are paying long traders to open their positions, which indicates that bearish positions were crowded out during the break.
As the price increases with the high usage shorts, exchanges force traders to buy back tokens to close out their trades. That forced buying adds new upward pressure, leading to a “short squeeze.”
XLM's PayPal and Trump rallies increase the risk of a severe pullback
Stellar's recent outperformance mirrors earlier XLM rallies that ended in sharp corrections.
In the year In November 2024, XLM rose almost 640% after Donald Trump was elected US President. However, the rally quickly lost momentum, with XLM later down 68.6% from its local peak.
XLM/USD two week chart. Source: TradingView
A similar pattern was seen in July 2025, when PayPal's stablecoin launched on Stellar and growing excitement around the Protocol 23 update helped XLM rally by 140%.
However, the uptrend was short-lived, with the XLM/USD pair later correcting by roughly 73.8%.
The danger now is that the DTCC-led rally will follow a similar pattern.
XLM is working hard towards long-term sustainability.
XLM's recent rally has pushed the token into a major long-term resistance zone, raising the risk of a reversal or consolidation.
As of Friday, XLM was trading in the $0.198–$0.224 ceiling area, and the zone overlapped with three exponential moving averages (EMA), namely the 50-week EMA (red) at $0.2216, the 100-week EMA (purple) near $0.2281 and near $200.2 (blue).
XLM/USD weekly price chart. Source: TradingView
Failure to break above the resistance compound, which analyst MAGIC called “too strong for the first test,” risks sending XLM prices to around $0.112–0.136, down 30%–40% from current levels, in June or July.
The lower target area is in line with the lower XLM bearish channel pattern.
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Conversely, a critical breakout above the resistance area raises the chances of XLM converging to the upper boundary of the channel near the $0.28–0.30 range in June or July. This is about 40% higher than the current price levels.
