Key Points
- XLM has dropped by less than 1% and is trading under $0.22.
- The cryptocurrency could retest the support level at $0.20 if the downward trend continues.
The cryptocurrency market is exhibiting a bullish Christmas trend, with Bitcoin and other major cryptocurrencies seeing gains. Bitcoin is currently trading above $87,000 after briefly falling below $86,000 earlier today.
However, some significant altcoins, including Stellar’s XLM, are remaining in the red despite favorable market conditions. At press time, XLM was trading below $0.22 after failing to close above a key resistance level earlier this week.
Bearish momentum is appearing to strengthen, with an increase in open interest (OI) and short positions. If this bearish momentum continues, XLM may face additional selling pressure in the short term.
Derivative Data Indicates Bearish Sentiment for XLM
The primary driver behind XLM’s bearish performance is derived from derivative products and on-chain data. According to CoinGlass, the open interest for XLM futures has surged to $112 million in the last 24 hours, up from $30 million the previous day.
Notably, the increase in OI has not translated into improvement in the asset’s performance, with XLM continuing to trade below a significant support level.
Moreover, the long/short ratio for XLM on CoinGlass stands at 0.91, the highest level in nearly a month. This suggests that despite the uptick in OI, bearish sentiment persists, as traders remain cautious about XLM’s price trajectory.
XLM May Drop Below $0.20
The XLM/USD chart on a four-hour timeframe shows bearish effectiveness, as the asset has underperformed recently. Currently trading at about $0.21, further losses seem likely in the short term.
If the downward trend continues, XLM may retest the low of December 18 at $0.20. A close below this psychological level could extend the decline toward the annual low of $0.16 recorded on October 10.
The RSI on the four-hour chart stands at 43, below the neutral level of 50, indicating growing bearish momentum. The MACD lines are also converging, hinting at indecision among traders.
Conversely, if XLM manages to recover, it might rebound towards the crucial resistance level at $0.22 in the coming hours.
