Key takeaways
- XLM has fallen by less than 1% and is trading below $0.22.
- If the bearish trend continues, the coin could retest support around $0.20.
The cryptocurrency market is enjoying a bullish holiday mood, with Bitcoin and several major tokens trading in the green. Bitcoin is trading above $87,000 after briefly dipping below $86,000 earlier today.
Despite favorable overall market conditions, some notable altcoins remain in the red, including Stellar’s XLM. At the time of writing, XLM is trading below $0.22 after failing earlier this week to close above a key resistance level.
Bearish pressure appears to be growing, as indicated by rising open interest (OI) and increased short positioning. If this bearish momentum persists, XLM could face additional selling pressure in the near term.
Derivative data for XLM points to a bearish sentiment
Derivatives and on-chain metrics are the main drivers behind XLM’s recent weakness. According to CoinGlass, XLM futures open interest rose to $112 million over the past 24 hours, up from $30 million recorded the previous day.
However, the surge in OI has not translated into price strength, with the token continuing to trade below significant support levels.
Furthermore, CoinGlass’s long-to-short ratio for XLM stands at 0.91, the highest level in nearly a month. This indicates that despite rising OI, bearish sentiment remains prevalent, with traders positioning for lower prices even as some increase long exposure.
XLM could drop below $0.20
The 4-hour XLM/USD chart looks bearish and momentum has weakened in recent days. At the time of publication XLM is trading around $0.21 and could see further losses in the short term.
If the downtrend persists, XLM could retest the December 18 low near $0.20. A decisive close below this psychological support could extend the decline toward the year-to-date low of $0.16 set on October 10.
The 4-hour RSI sits at about 43, below the neutral 50 level, signaling that bearish momentum is strengthening. MACD lines are also converging, reflecting indecision among traders and limited directional conviction.
Conversely, if XLM stages a recovery, it may move up toward the immediate resistance near $0.22 in the coming hours.