At first glance, the price of Stellar (XLM) appears relatively stable. Over the last quarter, it has increased by approximately 24%, and its value has remained consistent in recent weeks.
However, a more thorough examination of both technical indicators and on-chain data reveals that the underlying structure remains vulnerable. The anticipated upward breakout from the bullish flag pattern did not materialize, momentum indicators are weakening, and social media engagement is subdued. These factors suggest a potential continuation of the broader downward trend.
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Diminishing Social Media Attention and Weaker Buyer Influence
In the past three months, Stellar’s social dominance, which reflects the frequency of XLM mentions in cryptocurrency discussions, has sharply declined from its peak in July. On July 13, it reached 1.72%, but by October 7, it had plummeted to just 0.16%, the second-lowest point in three months, despite the buzz around potential ETFs.
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While social dominance has recovered somewhat to 0.36%, it remains significantly below previous highs, and the trend continues to exhibit lower peaks. This indicates that Stellar is not a primary focus for many traders.
The subdued social activity closely aligns with volume analysis trends, which assess shifts in buyer and seller control. Specifically, Wyckoff method volume analysis tracks these market participant behaviors.
The slight increase in social activity, from 0.16% to 0.36%, coincided with the reappearance of blue “buyer control” indicators, which signify short periods of renewed buying interest. However, these indicators are already diminishing.
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If these indicators revert to yellow or red, signaling seller control, as seen in mid-August and late September, XLM could experience another decline similar to the 12% to 20% corrections that followed those prior periods.
This combined reduction in social media attention and buying pressure indicates that market interest in Stellar remains weak, even during minor price recoveries.
Failed Price Pattern and Divergence Suggest Continued Downturn for Stellar
From a technical perspective, the Stellar (XLM) price has negated its bullish flag formation by dropping below the support trendline, rather than confirming an upward trend with a breakout. This failure suggests buyers were unable to sustain control long enough to drive prices higher.
Furthermore, the daily Relative Strength Index (RSI) has formed a hidden bearish divergence. This pattern, where the price creates lower highs while the RSI generates higher highs, often confirms that the current downward trend will continue.
This downward trend, which is not immediately apparent on price charts, began in mid-July when XLM fell from $0.52 to $0.34, representing a decline of approximately 35%. This downtrend has not been convincingly broken since then.
If Stellar falls below $0.37, the next significant support level is at $0.34, which corresponds to the low from late September. A clear drop below this level could extend the decline further. However, recovering $0.39 and then $0.41 would invalidate this bearish outlook, signaling renewed strength from buyers.