- Stellar (XLM) has dropped below $0.20, hitting a three-month low amid bearish derivatives data and weakening technical indicators.
- If the downtrend continues, XLM could test its yearly low of $0.16, while limited upside remains near $0.22.
Stellar (XLM) continues to struggle, slipping below $0.20 and marking its lowest level since October 11. Market indicators point to a persistent risk-off mood, with technical and derivatives data signaling further downside for XLM.
Derivatives Data Shows Bearish Bias
The derivatives market paints a negative picture for Stellar. Open Interest (OI) and funding rates highlight increasing bearish sentiment. Data from CoinGlass indicates the OI-Weighted Funding Rate turned negative on Thursday and was at -0.0049% on Friday, suggesting that traders betting on a price decline are outweighing those expecting gains.
Futures OI for XLM has also declined, dropping to $106.50 million on Friday from the January 6 high of $166.99 million. This steady decrease signals waning investor participation and reinforces the bearish near-term outlook for Stellar.
Technical Indicators Favor the Bears
Stellar’s technical setup supports further correction. XLM recently closed below the weekly resistance of $0.22 on January 18 and fell nearly 9% over the following two weeks. At the time of writing, the coin trades at $0.19, putting it at levels not seen in three months.
The Relative Strength Index (RSI) sits at 35, below the neutral 50 mark, confirming growing bearish momentum. Additionally, the Moving Average Convergence Divergence (MACD) indicator shows a sustained bearish crossover, with rising red histogram bars reinforcing the negative trend.
If the downtrend continues, XLM could revisit its yearly low of $0.16 set on October 10. Conversely, any recovery could see a test of the weekly resistance at $0.22, though bullish signs remain limited.
Market Context and Outlook
XLM’s decline mirrors broader market weakness in major cryptocurrencies. Bitcoin, Ethereum, and Ripple have also experienced sell-offs, with bearish sentiment dominating across the sector.
Investors should watch derivatives signals and technical indicators closely, as the next support and resistance levels will likely guide short-term price action for Stellar. The current market mood favors caution, with downside risks appearing more significant than potential gains.
ALSO READ: Stellar XLM Poised for Breakout Toward $0.26-$0.27 by February
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