Key Takeaways
- XLM has experienced a nominal decline of less than 1%, currently trading below the $0.22 threshold.
- Should the prevailing bearish trend persist, the cryptocurrency may retest the critical support level at $0.20.
The cryptocurrency market is witnessing a bullish trend, particularly evident during the Christmas season, as Bitcoin and other significant cryptocurrencies exhibit upward movement. Bitcoin’s price recently surged above the $87,000 mark, recovering from a temporary dip below $86,000 earlier in the day.
Contrastingly, several prominent altcoins, notably Stellar (XLM), continue to exhibit bearish performance despite the overall positive market sentiment. At the time of this analysis, XLM is trading under $0.22, having failed to secure a closing above this pivotal resistance level earlier in the week.
The prevailing bearish momentum is further corroborated by rising Open Interest (OI) and increased short positions in the market. If this trend continues unabated, XLM may face additional selling pressure in the near term.
XLM Derivatives Data Suggests Bearish Sentiment
The underlying factors contributing to XLM’s subpar performance can be traced to both derivatives and on-chain data analytics. According to CoinGlass, XLM’s futures Open Interest has escalated dramatically to approximately $112 million within a 24-hour period, a substantial increase from $30 million recorded just the previous day.
Despite this rise in OI, it has not been reflected in XLM’s market performance, as the cryptocurrency continues to trade below a crucial support level.
Moreover, CoinGlass indicates that the long-to-short ratio for XLM stands at 0.91, representing the highest level observed in nearly a month. This statistic suggests that although OI is on the rise, a predominance of bearish sentiment persists among traders who are betting against an upward price trajectory for XLM.
XLM May Experience Additional Declines Below $0.20
An analysis of the XLM/USD 4-hour chart reveals a distinctly bearish trend, characterized by underperformance over recent days. As of the latest data point, XLM is trading at approximately $0.21 and may be poised to incur further losses shortly.
Should bearish conditions persist, XLM may retest its December 18 low at $0.20. A close beneath this psychologically significant level could catalyze a decline towards its yearly low of $0.16 established on October 10.
Technical indicators further substantiate this outlook; specifically, the Relative Strength Index (RSI) on the 4-hour chart currently registers at 43—significantly below the neutral threshold of 50—indicating that bearish momentum is intensifying. The Moving Average Convergence Divergence (MACD) lines are also converging, highlighting indecision among market participants.
Conversely, should XLM manage to recover from its current position, it could potentially rally towards the critical resistance level near $0.22 within the forthcoming hours.
