Stellar (XLM) Faces Bearish Pressure Amid Market Uncertainty

Reading time : 3 min.
Share: Facebook
Twitter

Oleg Dimitrov
6 February, 2025, 01:56
309

Stellar (XLM) Faces Bearish Pressure Amid Market Uncertainty

In the midst of ongoing market uncertainty, Stellar (XLM) appears to be under significant bearish pressure, raising concerns about a potential price decline. On-chain analytics suggest that short positions are dominating the market, signaling a lack of bullish momentum.

Traders’ Strong Bets on Short Positions

On February 6, 2024, data from CoinGlass revealed a significant imbalance in leveraged positions on XLM. Traders holding long positions are heavily over-leveraged at the $0.3057 level, with $2.26 million in long positions. Conversely, traders betting against XLM hold $5.25 million in short positions at the $0.355 level.

This data suggests that if market sentiment shifts, millions of dollars worth of positions could be liquidated, causing sudden volatility. The current positioning underscores a clear bearish dominance, with bulls showing little strength to counteract the trend.

Economic Factors Weighing on XLM’s Performance

Adding to the bearish sentiment, ongoing economic tensions between major global players—including the United States, Mexico, Canada, and China—have dampened investor confidence. This broader uncertainty has contributed to reduced trading activity and a cautious approach from market participants.

XLM Technical Analysis and Key Support Levels

From a technical perspective, XLM has formed a bearish inverted cup and handle pattern on the daily time frame, a structure that typically signals a potential downtrend. Analysts highlight a critical neckline support level around $0.32.

NEAR Protocol Plummets: Bearish Pressure Mounts Amid Market Uncertainty

Should XLM fail to hold above this level and close a daily candle below $0.32, the likelihood of a 40% drop to the $0.20 mark increases significantly. This scenario would confirm a bearish breakdown, potentially leading to extended losses.

Mixed Signals from Moving Averages

Despite the prevailing bearish price action, XLM is still trading above the 200 Exponential Moving Average (EMA) on the daily chart. This suggests that, while short-term sentiment is bearish, the asset remains in a broader uptrend. If bulls manage to defend key support levels, a reversal could still be in play.

Current Price Momentum and Trading Activity

At the time of writing, XLM is trading near $0.33, reflecting a 7.50% decline over the past 24 hours. Trading volume has also dropped by 30% within the same period, indicating a reduction in market participation and increasing fears of further downside risk.

Final Thoughts: What’s Next for XLM?

With technical indicators flashing bearish signals and traders heavily positioned in short trades, XLM faces a critical test in the coming days. If the token can maintain its key support levels, it may stabilize and potentially stage a recovery. However, a break below $0.32 could open the door for a deeper correction toward $0.20.

Traders should closely monitor liquidation levels and market sentiment shifts to navigate potential volatility in XLM’s price action. As global economic uncertainties persist, risk management remains crucial for investors eyeing opportunities in Stellar’s price movements.