XLM Plunges 14% in Two Weeks After July 68% Rally

XLM’s explosive 68% rally in July 2025 has pushed Stellar into the top 15 largest cryptocurrencies by market capitalization, closing the month at $12.16 billion [1]. The sharp upward move has outpaced many of its peers, including Bitcoin and Ethereum, and sparked speculation about whether the momentum can carry into August. However, as the month transitioned, bearish pressure quickly emerged, with XLM falling 8% in a single day and 14% over two weeks, trading near $0.38 as of early August [1].

The decline has coincided with a key technical signal: XLM recently broke below its 20-day Exponential Moving Average (EMA) at around $0.40, a level that had previously acted as a support zone [1]. This move suggests a shift in short-term sentiment toward the bearish side. Additionally, historical data indicates that August has often been a weak period for XLM. Since 2017, the token has closed August in positive territory only twice—2017 and 2021—highlighting the potential for another downturn [1].

Market sentiment appears to be turning cautious. According to the Fear and Greed Index tracked by CFGI.io, Stellar’s sentiment has reached extreme levels, a pattern historically followed by corrective phases [2]. The index, which evaluates behavior across multiple timeframes, warns that the "Red August" scenario—seen in previous cycles—could repeat if current conditions persist.

Despite the bearish signs, some traders and analysts remain hopeful. A potential flag-and-pole pattern is forming on the XLM chart, which could signal a future breakout toward $0.80 if bullish momentum regains control [1]. However, a continuation of the current trend may see XLM test the $0.36 support level, with further downside potential to $0.32. A successful rebound above the 20-day EMA at $0.40 could indicate a shift in direction and rebuild short-term optimism [1].

On-chain activity has increased in response to the rally, and there is renewed interest in Stellar’s utility, particularly in cross-border payments and DeFi use cases [1]. Retail and institutional traders are closely watching how broader crypto conditions evolve, as they could influence whether XLM sustains its upward trajectory.

The coming weeks will be critical in determining whether XLM can stabilize or face further losses. While the potential for a rebound exists, the market remains uncertain, with many traders bracing for either a consolidation phase or a deeper correction. The key will be tracking volume and sentiment shifts, as they could provide early signals of a potential turnaround [1].

Source: [1] Stellar (XLM) Faces Volatility After 68% Rally in July (https://www.coinspeaker.com/stellar-xlm-price-forecast-august-2025/)

[2] Stellar Fear and Greed Index | Multiple Timeframes (https://cfgi.io/stellar-fear-greed-index/)