The cryptocurrency market has been facing a significant slump, and Stellar Lumens (XLM) is no exception. Over the past seven days, XLM has recorded massive losses, declining by over 8% in the last 24 hours alone. At the time of writing, XLM is trading at $0.159, which indicates bearish market sentiment. Let’s take a deeper dive into the factors influencing this decline and evaluate the potential outlook for XLM in the near term.
Technical Analysis: Why Is Stellar (XLM) Dropping?
Stellar’s performance has mirrored the broader cryptocurrency market, showing signs of weakness across key technical indicators. The 4-hour chart for XLM/USD reflects an extremely bearish trend, with the cryptocurrency losing 22% of its value within a week. The price was rejected at $0.1835 earlier this week, leading to a sharp decline.
The Relative Strength Index (RSI) currently reads 36, indicating oversold conditions that support strong bearish momentum. Additionally, the MACD (Moving Average Convergence Divergence) remains in a bearish zone after crossing over three weeks ago, further solidifying the negative outlook for XLM.
Market Sentiment
According to derivatives data from CoinGlass, XLM’s long-to-short ratio stands at 0.85, one of the lowest values seen in a month. This suggests a strong bearish sentiment among traders, with more investors betting on XLM’s price to fall further.
The Open Interest (OI) for Stellar futures has dropped to $97 million, marking the lowest level since November 2024. Declining Open Interest often signals decreasing investor participation, which could project additional downward pressure in the coming days.
Comparison with Major Cryptocurrencies
Notably, XLM’s performance is consistent with bearish trends across the broader cryptocurrency market. Bitcoin (BTC) has fallen below the $70,000 mark, losing 7% of its value in just a day. Other major assets, such as Ethereum (ETH) and XRP, are also experiencing declines, further amplifying the market’s overall negative sentiment.
Opportunities and Upside Potential
Despite its current struggles, Stellar may present short-term recovery opportunities if the bulls regain traction. A rebound above $0.1835 would push XLM toward its resistance level at $0.213, offering traders an entry point for potential gains. However, any sustained upward movement would require improved market sentiment and greater investor confidence.
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Final Thoughts
XLM’s recent performance highlights the volatile nature of cryptocurrency markets. While current indicators point toward bearish momentum, a potential recovery cannot be ruled out entirely. Traders and investors should closely monitor market trends and utilize reliable trading platforms to navigate these challenging conditions effectively.
