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Quick analysis of the situation
This week, Stellar Lumens (XLM) found itself at a crossroads—or should I say, a support level—of $0.20. A precarious position for a crypto titan, especially since it sits a whopping 30% below its May peak and a stunning 60% beneath its 2024 high. Regular readers may ponder whether XLM is heading towards a glittering revival or a disastrous dive into the abyss.
All signs point to the bears having a tea party, and the guest list is growing. Since early June, funding rates have spiraled into negative territory, leaving traders in a bearish haze. If XLM fails to hold its support, we might be looking at a steep slide to $0.15—an attractive 35% drop that could make even the bravest trader weep into their portfolios.
But wait! Don't hang up your bull horns just yet. There’s a flicker of silver lining in the clouds hovering over Stellar’s skies. According to Artemis, operations on the Stellar network surged to a formidable 197 million in June. Not only that, but the stablecoin supply reached a record-breaking $667 million. Someone's clearly throwing a party on the Stellar blockchain, and it seems the on-chain services and asset tokenization are the VIP guests.
However, the funding rates tell a different story. For most of June, perpetual futures have been a veritable bear feast, with more short positions than a knitters’ convention. Short traders have been so eager to maintain their positions that they’ve been paying long traders just to hang around. The funding rate recently hit its lowest point since June 30, indicating an increasingly bearish sentiment. It’s like the market collectively decided to throw in the towel—with red flags waving ever so dramatically.
Now, here’s the kicker: while Stellar’s network activity is on the rise, the price action is decidedly ho-hum. Nansen data reveals that the number of transactions increased by 11% last week, pushing it to 182 million and with active addresses climbing by 10% to 146,700. Could be a promising sign, right? Unfortunately, the market seems to have missed this memo entirely—XLM sneaked below its 50-day and 100-day Exponential Moving Averages, and momentum is decidedly leaning in favor of sellers.
That said, some observers believe that deep negative funding could lead to a short squeeze—a sudden rise in price that might surprise those shorts and inject a burst of enthusiasm into the market. Think of it as the crypto equivalent of hitting the snooze button, but in this case, still in pajamas, while the market races ahead.
In terms of chart patterns, a descending triangle has been forming, with $0.21 acting as the lower trendline—a haunting reminder of April’s lows when altcoins were evicted from their party. XLM has dipped below the 60% Fibonacci Retracement zone, typically a hotbed for traders looking for a rebound. Should it break under the triangle, you might want to hide your trading positions, as algorithm-driven orders could send the price toward that grim $0.15.
All in all, Stellar’s fundamentals look as solid as ever—like a well-constructed table needing just the right amount of elbow grease. But on the technical side, the signals are glaringly bearish, and all eyes should be glued to that critical $0.21 line. A bounce back from that could reignite confidence in Stellar’s on-chain prowess.
In the crypto world, volatility is the name of the game. Whether Stellar Lumens will recover or plummet will depend on how it navigates this critical juncture. So, keep your wits about you, fellow traders! The fate of XLM is hanging in the balance, and we’re all just along for the tumultuous ride.
Disclaimer: Our articles are NOT financial advice, and we are not financial advisors. Your investments are your own responsibility. Please do your own research and seek advice from a licensed financial advisor beforehand if needed.
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Please, behave!