Why did the price of XLM fall?

Stellar (XLM) dropped 3.56% in the last 24 hours, underperforming the overall crypto market, which fell by 0.75%. This decline happened after XLM hit a key resistance level and investors took profits following recent news about ETFs.

1. Technical Resistance (Negative Impact) – XLM couldn’t break above $0.41, leading to selling pressure.
2. ETF News Sparks Profit-Taking (Mixed Impact) – Positive ETF filings were followed by traders cashing out.
3. Lower Trading Activity (Negative Impact) – Reduced market liquidity made the price drop more pronounced.

In-Depth Analysis

1. Technical Resistance at $0.41 (Negative Impact)

On October 3, XLM briefly rose to $0.4041 but faced strong selling near the $0.41 mark, a key resistance level (CoinDesk). Over 1.4 million tokens were sold in just one minute, indicating large investors were offloading their holdings.

This $0.41 level matches important technical indicators, including the Fibonacci retracement at $0.398 and a resistance trend seen over several weeks. Multiple failed attempts to break this level suggest that buying momentum is weak.

Watch for a close below $0.39, which could lead to further declines toward support at $0.38.

2. ETF-Driven Profit-Taking (Mixed Impact)

On October 3, REX-Osprey filed for ETFs that include XLM staking products, briefly boosting optimism. However, many traders took this opportunity to sell and lock in profits amid overall market volatility.

While ETF approvals could attract more institutional investors in the future, the U.S. Securities and Exchange Commission (SEC) has a 75-day review period, creating uncertainty. After a strong 57% rally over the past 90 days, short-term traders are likely taking gains.

3. Thin Market Conditions (Negative Impact)

Overall crypto trading volume dropped 23.8% over the past week, and XLM’s 24-hour turnover ratio is just 1.77%, indicating low liquidity.

Lower liquidity means the market has less capacity to absorb large sell orders, which can lead to sharper price drops. XLM’s trading volume fell 38.75% in the last 24 hours, intensifying the downward pressure.

Conclusion

XLM’s recent price drop is due to technical resistance, profit-taking after ETF-related news, and weak market liquidity. While longer-term factors like adoption of real-world assets (such as Moody’s projections for RWA) remain positive, short-term price action depends on whether XLM can hold above $0.39.

Key point to watch: Can XLM stay above its 30-day simple moving average ($0.379) to avoid a deeper correction?

What could affect the price of XLM?

Stellar’s price depends on upcoming network upgrades, growing interest in crypto ETFs, and real-world use cases—but it also faces competition from XRP and some technical challenges.

1. Protocol 23 Upgrade – A major update in Q3 2025 will improve scalability by allowing multiple smart contracts to run at once, which could attract decentralized finance (DeFi) and real-world asset (RWA) projects.
2. ETF Momentum – Stellar is included in 21 crypto ETF filings, including those by REX-Osprey, showing growing institutional interest.
3. XRP Connection – Regulatory clarity for Ripple (XRP) might benefit Stellar, but Stellar’s partnerships with Visa and PayPal for stablecoins set it apart.

Deep Dive

1. Protocol 23 Upgrade (Positive Outlook)

What’s happening:
Stellar’s Protocol 23 upgrade is scheduled for September 2025. It will enable the network to process transactions in parallel and improve smart contract performance through Soroban technology. This means faster transactions (up to 5,000 per second) and lower fees, making it more attractive for DeFi and tokenized asset projects.

Why it matters:
Better scalability can draw developers and institutions looking for efficient payment systems and asset tokenization. For example, Franklin Templeton recently issued $445 million in U.S. Treasury securities on Stellar, showing strong institutional demand. If the upgrade succeeds, Stellar’s current price resistance around $0.40–$0.45 could become a solid support level.

2. ETF Filings & Regulatory Environment (Mixed Impact)

What’s happening:
Stellar is part of 21 proposed crypto ETFs, including staking-enabled products by REX-Osprey. However, the U.S. Securities and Exchange Commission (SEC) is still cautious, with only 12 cryptocurrencies currently considered “fast-track” for approval.

Why it matters:
If approved, these ETFs could bring significant investment inflows similar to what Bitcoin ETFs experienced. But delays or rejections might cause price drops. Stellar’s recent 59.49% price increase over 90 days partly reflects optimism about these ETFs, so some price swings are expected.

3. XRP Correlation & Stablecoin Competition (Neutral to Slightly Negative)

What’s happening:
Stellar’s price moves closely with XRP, showing a 0.95 correlation. However, Stellar focuses on compliant stablecoins like PYUSD and EURCV, while Ripple (XRP) is dealing with ongoing legal issues.

Why it matters:
XRP’s positive regulatory news could temporarily boost Stellar’s price. Stellar’s $667 million stablecoin supply positions it as a regulated alternative for digital payments. Still, competition from traditional financial systems like SWIFT moving into blockchain technology could challenge Stellar in the long run.

Conclusion

Stellar’s price outlook looks positive if the Protocol 23 upgrade is successful and crypto ETFs get regulatory approval. However, technical resistance near $0.41 and competition from XRP remain challenges. Keep an eye on the September 2025 upgrade and SEC decisions on ETFs to see if institutional investors favor Stellar’s practical uses over speculative hype.

What are people saying about XLM?

The Stellar (XLM) community is divided between excitement over a major protocol upgrade and concerns about technical challenges. Here’s what’s trending:

1. The upcoming Protocol 23 upgrade is driving optimistic bets, but some remain cautious
2. Traders are debating whether $0.40 is a key support level that will hold or break
3. Growing institutional interest in real-world assets (RWA) on Stellar adds long-term optimism

Deep Dive

1. Protocol 23 Mainnet Upgrade Sparks Optimism

John Morgan (@johnmorganFL), a well-known crypto analyst with over 1.2 million followers, recently highlighted that Stellar’s Protocol 23 upgrade could lead to significant price gains.
See his original post
What this means: The upgrade, scheduled for a mainnet vote on August 14, aims to increase smart contract speed to 5,000 transactions per second (TPS). This could attract decentralized finance (DeFi) projects to Stellar, boosting its ecosystem. However, some investors worry about potential risks in implementing these changes.

2. $0.40 Support Level Under Debate

An anonymous trader on CoinMarketCap’s community forum pointed out that Stellar’s price is testing a support range between $0.403 and $0.406.
Read the discussion
What this means: This is a neutral signal. If the price holds above $0.40, it could bounce back by about 4%. But if it falls below this level, the price might drop further toward the June low of $0.38. Traders are watching this level closely to decide the next move.

3. Institutional Adoption of Real-World Assets (RWA)

Yahoo Finance reported that Franklin Templeton has tokenized $445 million of its treasury assets on the Stellar network, signaling growing institutional interest.
Check the full article
What this means: This development is positive for Stellar’s long-term outlook. Tokenizing real-world assets on the blockchain can increase adoption and value. However, Stellar’s total value locked (TVL) in RWAs is currently $86.7 million, which is much smaller compared to Ethereum’s $219 billion, so the short-term impact is limited.

Conclusion

The outlook for Stellar (XLM) is mixed. The Protocol 23 upgrade could significantly enhance Stellar’s role in DeFi, but technical resistance around the $0.40 level is a key hurdle. Traders are waiting for a clear price move above $0.42 or below $0.38 to confirm the next trend. The August 14 mainnet vote on Protocol 23 will be important—if it goes smoothly, it could justify the 59% price increase Stellar has seen this year.

What is the latest news about XLM?

Stellar is making big moves with new ETFs, technology upgrades, and plans for real-world assets. Here’s the latest:

1. 21 Stellar ETFs Filed (October 4, 2025) – Institutional interest grows as REX Shares and Osprey Funds seek SEC approval.
2. Protocol 23 Upgrade Launched (October 3, 2025) – Improved scalability sets the stage for decentralized finance (DeFi) and real-world asset growth.
3. Trillion-Dollar Real-World Asset Vision (October 3, 2025) – Stellar teams up with Centrifuge and Moody’s to forecast massive on-chain asset growth.

Deep Dive

1. 21 Stellar ETFs Filed (October 4, 2025)

What happened:
REX Shares and Osprey Funds have filed for 21 new crypto ETFs, including one for Stellar (XLM), that offer staking options. These funds plan to invest up to 40% in non-U.S. exchange-traded products and will use Cayman Islands subsidiaries to meet U.S. tax rules.

Why it matters:
If approved, these ETFs would open the door for regulated institutional investors to get involved with Stellar, similar to what happened with Solana staking ETFs. Including Stellar alongside other popular altcoins like Cardano shows growing interest in diversifying crypto investments. (CoinGape)

2. Protocol 23 Upgrade Launched (October 3, 2025)

What happened:
Stellar rolled out Protocol 23, nicknamed “Whisk,” which introduces parallel smart contracts, better performance, and a unified way to handle events on the network. This upgrade aims to make the network faster and more efficient, especially for DeFi and real-world asset applications.

Why it matters:
This upgrade is a positive step toward improving Stellar’s infrastructure. With a goal of processing 5,000 transactions per second and lowering fees, it could attract more developers and projects. However, the real impact depends on how quickly these improvements are adopted. (PaulGoldEagle on X)

3. Trillion-Dollar Real-World Asset Vision (October 3, 2025)

What happened:
Stellar, along with Centrifuge and Moody’s, predicts that real-world assets (RWAs) on blockchain could reach trillions of dollars by 2030. Stellar highlighted partnerships with Franklin Templeton, which has $445 million in tokenized treasuries, and Visa for cross-border foreign exchange pilots.

Why it matters:
This shows Stellar’s commitment to bringing traditional assets onto the blockchain in a compliant way, which is attractive to institutional investors. However, competition from other blockchains like Ethereum and Solana in this space remains a challenge. (CryptoNews)

Conclusion

Stellar’s potential ETF approvals, recent technology upgrades, and leadership in real-world asset tokenization suggest a promising future. With Protocol 23 now live, the question is whether on-chain foreign exchange and institutional tokenization can push XLM past its $0.41 resistance level.

What is expected in the development of XLM?

Stellar's development is progressing with key updates:

1. Protocol 23 Mainnet Upgrade (Q3 2025) – Boosts speed by running smart contracts in parallel.
2. Enterprise Solutions (Q4 2025) – Introduces easy-to-use wallets and payment options for businesses.
3. Protocol 24 & ZK Privacy (2026) – Adds advanced privacy features using zero-knowledge proofs.

Deep Dive

1. Protocol 23 Mainnet Upgrade (Q3 2025)

Overview
Launched in September 2025, Protocol 23 allows Stellar’s Soroban smart contracts to run multiple transactions at the same time, increasing capacity to about 5,000 transactions per second (up from around 1,000). It also simplifies tracking assets and speeds up data verification (CoinDesk).

What this means
This upgrade makes Stellar more scalable and attractive for businesses dealing with decentralized finance (DeFi) and real-world assets (RWAs). However, if developers take time to adopt these new features, growth could slow down.

2. Enterprise Solutions (Q4 2025)

Overview
Stellar is launching tools like Hosted Mode, which lets businesses accept payments without fully integrating with the blockchain, and single-use wallets to simplify payroll and vendor payments (The Defiant).

What this means
These tools make it easier for traditional companies to use Stellar, which is a positive sign. The success of these solutions depends on partnerships with big players like Visa and Franklin Templeton, who have already tokenized $445 million in U.S. Treasuries on Stellar.

3. Protocol 24 & ZK Privacy (2026)

Overview
Stellar is working with Nethermind and Aztec Network to add privacy features using RISC Zero zkVM and NoirLang. This will allow private and compliant transactions on the network (CryptoNews).

What this means
This is promising for the long term, as privacy features could attract regulated financial institutions. However, competition from privacy-focused blockchains like Monero and Zcash could limit its impact.

Conclusion

Stellar’s roadmap focuses on improving speed (Protocol 23), business usability, and privacy (Protocol 24), aiming to strengthen its role in real-world assets and cross-border payments. With $522 million in on-chain RWAs and partnerships with companies like MoneyGram and Visa, Stellar’s future depends on how quickly developers adopt new features and how regulations evolve. Will Protocol 23’s speed improvements help Stellar break into the top 10 DeFi platforms?

What updates are there in the XLM code base?

Stellar is making important updates with Protocol 23, new cross-chain swap features, and improved developer tools.

1. Protocol 23 Mainnet Upgrade (September 3, 2025) – Testnet reset done; mainnet upgrade voting scheduled.
2. NEAR Protocol Integration (August 19, 2025) – Direct swaps into Stellar USDC from over 20 blockchains.
3. Java SDK Update (Coming Soon) – Better support for Soroban smart contracts and improved transaction handling.

Deep Dive

1. Protocol 23 Mainnet Upgrade (September 3, 2025)

What’s Happening: Stellar’s test network was reset on August 14 to prepare for the mainnet upgrade vote on September 3. All node operators need to update their software to keep running smoothly. This reset clears old test data and ensures compatibility with important core improvements.

Technical Highlights:

• Introduces parallel transaction processing, which means the network can handle multiple transactions at once, speeding things up.
• Adds a reusable cache for inter-ledger data, improving efficiency.
• Unifies asset event handling (CAP-0067) for better tracking.
• Moves Soroban’s live state to memory, cutting costs for smart contract calls by about 40%.

Why It Matters: This upgrade aims for Stellar to process 5,000 transactions per second with ledger finality in 2.5 seconds—key for large-scale real-world asset (RWA) tokenization. Node operators must upgrade before the deadline to avoid service interruptions. (Source)

2. NEAR Protocol Integration (August 19, 2025)

What’s Happening: Stellar now supports direct swaps from NEAR and more than 20 other blockchains into Stellar USDC without needing bridges, making cross-chain transfers simpler and faster.

Technical Highlights:

• Uses NEAR Protocol’s Intents framework to handle gas fees and chain differences behind the scenes.
• Built on Soroban’s WASM smart contracts, enabling atomic swaps that complete fully or not at all, reducing risk.

Why It Matters: This improves Stellar’s ability to work with other blockchains, making it easier to move stablecoins like USDC into the Stellar network. This is a positive step for XLM, though its success depends on how widely NEAR is adopted. (Source)

3. Java SDK Update (Coming Soon)

What’s Happening: The Java software development kit (SDK) for Stellar is getting a major update to better support Soroban smart contracts and improve transaction handling.

Technical Highlights:

• Adds pollTransaction to help retry transactions automatically.
• Improves validation for muxed accounts with StrKey.
• Moves cryptographic processing to the background to keep the main app running smoothly.

Why It Matters: This update makes it easier and safer for developers building Java-based apps on Stellar. However, some changes will require developers to update their code to use the new APIs. (Source)

Conclusion

Stellar is focusing on making its network faster, more connected with other blockchains, and easier for developers to build on. These improvements support its goal of becoming a leading platform for enterprise decentralized finance (DeFi) and real-world asset tokenization. The big question: how much will lower smart contract costs boost Soroban’s use in payment systems?