Stellar (XLM) Remains On The Verge Of A Major Rally Despite Recent Sell-Off

Stellar Lumens (XLM) has been the face of negative news and criticism over the past few weeks that saw its price tank aggressively to new lows. In fact, XLM/USD was one of the few cryptocurrencies pairs to fall below the December lows during the recent sell off. This extraordinary decline in Stellar (XLM) seems to have been accelerated by insider selling. When reports regarding Stellar Development Fund selling its own tokens on popular exchange, Kraken began to surface, investors were quick to react and sold their tokens so quickly that the price tanked below a critical support before it could see any buyers. The Stellar Development Team had to know that this might happen if they sell some of their tokens but blockchain projects constantly need a flow of new capital to keep their operations running smoothly.

Some critics were quick to attack Stellar for losing faith in their own project which is why they sold some of their tokens without realizing that the bear market has been hard on a lot of blockchain companies and they take such measure being fully aware of the consequences just because they have no other options. It is like allocating capital to a research firm and then blaming the researchers for using that money to fund their research. This is what it is. An investment in Stellar (XLM) or any other cryptocurrency is not the same as investing in the stock of the company behind it. It is no different than funding a Kickstarter campaign and hoping that their project succeeds just because you want it to succeed. As an early investor, you might get some benefits but you don’t get equity in the company.

Markets overreact to such developments all the time. During bullish times, people react way optimistically to something slightly good for a project whereas during bearish times, people react way pessimistically to something slightly bad or even normal for a project such as selling some of their tokens to raise funds for operations. Despite the recent sell-off, Stellar (XLM)’s prospects are better than ever as it keeps getting listed on new exchanges and funds. The price is currently at a very attractive point from a risk/reward standpoint. It is surprising to see why the price has not recovered yet from current levels but it would not be out of the ordinary to see Stellar (XLM) leading with double digit gains during the upcoming recovery.

Stellar (XLM) has formed a major bull flag trading against the US Dollar (USD) and it has formed a giant bullish pennant trading against Bitcoin (BTC). Both of these patterns may get invalidated several times because it all comes down to the price action on Bitcoin (BTC). However, the big picture always stays intact no matter which patterns get invalidated short term and which do not. The weekly chart for XLM/BTC shows that Stellar (XLM) is now at the bottom of a bullish pennant trading against Bitcoin (BTC). This pennant has a very high probability of breaking to the upside in the weeks and months ahead.