Key Points to Note
XLM’s price has dipped below a bearish flag formation, potentially heading towards $0.378. Futures market data indicates strong selling pressure, coupled with negative funding rates and a surge in long position liquidations, suggesting increased bearish momentum.
Recent price action shows Stellar (XLM) has fallen out of a bearish flag pattern, which typically points to growing downward trends in the market.
Market analysts are now eyeing $0.378 as the next significant price target, a sign that sellers are gaining control after a period of price stability.
At the time of this report, XLM was trading around $0.4075, reflecting a decline of over 5% in the last 24 hours.
This wave of selling is putting pressure on investor confidence as the overall market outlook continues to weaken.
The price drop is happening alongside a rise in large sell orders and greater instability in the derivatives market, indicating that sellers are currently steering the short-term direction.
Source: X/Ali Charts
What XLM Futures CVD Reveals
The Futures Cumulative Volume Delta (CVD) is indicating a consistent trend of sellers driving the market, with traders actively executing sell orders.
This indicator suggests there’s significant market activity from participants reducing their long positions and favoring strategies that profit from price declines.
The persistent selling pressure highlights a notable change in investor behavior, potentially hindering any attempts at price recovery.
The ongoing decline in CVD underscores that the current downward trend isn’t just a technical issue but is supported by the activity in the futures market.
As a result, buyers may find it increasingly challenging to influence short-term price movements, as sellers maintain control with their sustained activity.
Source: CryptoQuant
The Increasing Bearish Sentiment for XLM
Funding rates on major exchanges like Binance have turned negative, registering at -0.009%. This indicates that traders are willing to incur costs to maintain positions that profit from a decline in price.
The sustained presence of negative rates reflects a definitive shift in market sentiment towards anticipating further price decreases.
This bearish inclination confirms a growing conviction among traders in the derivatives market that XLM’s downward trend has not yet reached its conclusion.
While significantly negative funding rates can occasionally prompt short squeezes, the current rates are within a relatively moderate range.
For the time being, these persistently negative rates mirror a broader market apprehension, adding to the rationale for expecting continued bearish conditions in the near future.
Source: Santiment
Sentiment After the July Rise
Stellar’s weighted sentiment experienced a noticeable peak in mid-July, briefly elevating optimism to levels unseen in several months.
However, this sentiment has since sharply reversed into negative territory at -0.266, signaling growing pessimism among both traders and holders due to increasingly bearish indicators.
This downturn illustrates that the earlier excitement from price rallies has waned, leaving market confidence in a vulnerable state.
The current psychological climate now mirrors the technical weaknesses, making it more challenging for those bullish on the coin to regain any significant upward momentum.
Overall, the prevailing weak sentiment suggests that most market participants anticipate further price declines rather than a quick recovery, which reinforces a cautious stance towards Stellar.
Source: Santiment
The Impact of Long Liquidations on XLM’s Price Decline
Data regarding liquidations shows a clear imbalance between positions expecting a price increase versus those anticipating a decrease. Recently, liquidations of long positions have been notably higher.
This indicates that traders who had bet on XLM increasing in value using borrowed funds have been forcibly closed out of their positions, adding selling pressure to the market.
At one point, the value of liquidated long positions exceeded $700,000, dwarfing the minimal $1,620 lost by those holding short positions.
The effect of these liquidation cascades has amplified downward price movements, intensifying the selling momentum in what is already a fragile market situation.
This trend confirms that traders who were optimistic about Stellar’s price are becoming increasingly vulnerable, while those betting against it are holding steady.
Consequently, these liquidations are contributing to and reinforcing Stellar’s current negative trajectory.
Source: CoinGlass
Can Stellar Hold Above $0.378?
XLM is encountering a confluence of bearish signals, including dominant selling in the futures market, negative funding rates, weak market sentiment, and high long liquidation volumes, all of which create a challenging environment for those bullish on the cryptocurrency.
The breakdown from its established flag pattern is further substantiated by data from both on-chain activities and derivatives trading.
Without a substantial increase in buying activity, Stellar’s price may continue to fall toward the $0.378 level.
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