Stellar’s XLM token has climbed 6% over the past week as the broader crypto market shows signs of recovery. At press time, the altcoin trades at $0.28. 

However, a key momentum indicator is flashing warning signals, suggesting the rally may be short-lived. Should XLM holders brace for decline?

XLM Struggles to Hold Gains

A bearish divergence has emerged with XLM’s Chaikin Money Flow (CMF), indicating weakening buying pressure despite the recent price increase. While XLM’s price has climbed in the past week, its CMF has fallen, remaining below the zero line at -0.10 at press time.

This trend occurs when an asset’s price rises while its CMF declines, signaling that fewer investors are supporting the rally with actual capital inflows. As a result, the uptrend may be unsustainable, increasing the risk of a reversal.

If the divergence persists, XLM’s selling pressure could build up, increasing the likelihood of a price reversal or correction in the near term.

Moreover, XLM’s funding rate has flipped negative for the first time in six days, highlighting the growing bearish bias against the altcoin. At press time, the figure is -0.0018%.

The funding rate is a periodic fee exchanged between long and short traders in perpetual futures contracts, reflecting market sentiment. When it turns negative, short positions are dominant, indicating bearish sentiment as traders increasingly bet on a price decline.

As more traders bet on XLM’s price decline, demand will continue to weaken, and downward pressure on its price will increase. 

XLM Down Over 50% Since November—Is a Reversal on the Horizon?

On the daily chart, XLM trades within a descending parallel channel. It has remained within this bearish channel since reaching a three-year peak of $0.63 last November. Now trading at $0.28, the altcoin’s price has since plunged 55%.

With strengthening bearish pressure, XLM risks falling below the channel’s lower trendline. If this happens, the altcoin could trade at $0.23.

Conversely, if XLM accumulation resumes, its price could rally past the resistance at $0.30. If succesful, it could attempt to reach $0.41.

President Trump just gave a brief pre-recorded speech at the Digital Asset Summit, his first such address as a sitting head of state. He focused on past accomplishments and alluded to new stablecoin developments.

Trump implied that he may be helping create more dollar-backed stablecoins in the near future, but he didn’t make a firm commitment. Still, the federal government could use such an asset to provide huge amounts of liquidity to the whole crypto ecosystem.

Trump’s Summit Speech

Since taking office, President Trump has had a huge impact on US crypto policy. Yesterday, it was announced that Trump would speak at the Digital Asset Summit in New York City this morning. Via pre-recorded broadcast, he talked about his existing accomplishments and emphasized his hope for stablecoin regulation:

“I’ve called on Congress to create simple, common-sense rules for stablecoins and market structure. With the right legal framework, institutions large and small will be enabled to invest, innovate, and take part in one of the most exciting technological revolutions in modern history,” he said.

This isn’t Trump’s first experience speaking at a Summit like this; two weeks ago, he hosted a Crypto Summit at the White House. However, this didn’t have a huge impact on markets. Comparatively, he made a huge splash when he spoke before a crowd at the Bitcoin Conference in Nashville. The community hoped that his speech today would build bullish sentiment.

Lately, the crypto community has been desperate for a bullish narrative. Credible fears of a US recession are discouraging investment, and the “Made in USA” assets have suffered from previous disappointments. However, stablecoin regulations may be able to more fully integrate crypto with the US economy and the global economy in general.

“With the dollar-backed stablecoins, you [the community] will help expand the dominance of the US dollar for many, many years to come. It’ll be at the top, and that’s where we want to keep it,” he added.

This clear signal that Trump wants to aid dollar-backed stablecoins, possibly even creating new ones, could be huge. Recently, members of his greater orbit were allegedly in talks with Binance about creating such an asset. By fusing the US economy with these tokens, Trump could provide a huge amount of liquidity for the entire space.

Stablecoins are reshaping digital finance, offering a fast and accessible way to move money across borders. With a total supply of $214 billion and $35 trillion in transfers over the past year, they’re no longer just a niche crypto tool—they’re a growing financial powerhouse.

However, too much transparency is now presenting as a major problem that could impede their wider adoption.

Stablecoins and Transparency: A Hurdle for Mass Adoption

Artemis and Dune Analytics conducted a report on the State of Stablecoins in 2025, exploring supply, adoption, and market trends. Based on the findings, the total stablecoin supply has reached $214 billion, with up to $35 trillion in transfers over the past year.

Their transaction volume has surpassed major payment networks like Visa and Mastercard, proving their growing influence.

However, despite their rapid adoption, transparency presents a key hurdle for stablecoins. While the blockchain’s openness is great for security and trust, it is not always ideal for everyday payments.

“Crypto payments failed for one small reason that needs fixing: When sending USDC, let the recipient see the transaction but not your address. Nobody wants to reveal their wallet for a 10 USDC beer payment,” DeFi researcher Ignas remarked.  

Another user likened it to exposing your bank balance whenever you split a bill with friends. In the same way, the dominance of USDT and USDC stablecoins is apparent. Tether’s USDT and Circle’s USDC control most of the market.

Jean Rausis, co-founder of the DeFi platform SMARDEX, finds this concerning.

“The surge in stablecoin wallets shows that investors trust them during market volatility. But most of this growth is happening with centralized stablecoins that carry the same counterparty risks as traditional banks,” Rausis told BeInCrypto.

The crypto executive believes the future lies in decentralized stablecoins backed by assets like Ethereum (ETH) and featuring automated yield mechanisms.

Banks Are Paying Attention to Growing Stablecoin Regulation

The Artemis and Dune report also shows that stablecoins have already surpassed Visa and Mastercard in transaction volume. This traction has effectively attracted the attention of traditional financial institutions.

Against this backdrop, stablecoins are no longer just for crypto traders. Institutional interest is surging, with US banks now allowed to offer stablecoin services. The Bank of America (BoA) is considering launching its stablecoin, which is pending regulatory approval.

However, with greater adoption comes increased scrutiny. Privacy-focused cryptocurrencies like Monero (XMR), which solve the transparency issue by hiding transaction details, have faced legal roadblocks due to concerns over money laundering.

Despite transparency concerns, stablecoins are thriving in countries battling inflation. In places like Nigeria, they are becoming a reliable alternative to unstable local currencies. At the same time, competition is heating up, with new players looking to challenge Tether and Circle’s dominance.

For stablecoins to truly go mainstream, they must balance transparency with privacy. While regulators demand oversight, everyday users do not want to broadcast their financial history. Technologies like zero-knowledge proofs and selective disclosure could offer solutions, allowing users to control what information they share.