Stellar (XLM) Loses $130 Million in Open Interest After Doubling Its Price

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As a seasoned crypto investor with battle-scars from the 2017 bull run and the infamous bear market of 2018, I can’t help but feel a mix of excitement and caution when it comes to Stellar (XLM). The recent surge in XLM Open Interest was indeed promising, reminiscent of the days when altcoins mooned overnight. However, the current drop in Open Interest is a stark reminder that the crypto market can be as unpredictable as a roller coaster ride at an amusement park – thrilling one moment and nauseating the next.

In the last seven days, Stellar (XLM) skyrocketed by more than 100%. However, it’s now experiencing a significant decrease in Open Interest. This decrease in XLM Open Interest suggests that derivatives traders are losing interest, which could signal a slowing of the recent rally’s power.

Despite maintaining hopeful outlooks, on-chain analysis indicates that XLM’s price might undergo a substantial drop if the present market trends persist without improvement.

Stellar Market Dominance Fizzles

As a researcher, I’m excited to share that on November 24th, the Open Interest for XLM surpassed $339 million, marking an all-time high. Previous findings suggest this significant interest in the altcoin might be connected to the escalating price of Ripple (XRP).

Currently, the Organisation Internationale de Normalisation (OIN), often referred to by its abbreviation OI, stands at approximately $209 million. This significant drop suggests that traders have closed positions valued at around $130 million. Notably, this decrease occurred concurrently with a 10% price fall of XLM over the last 24 hours, which led to it shedding a tenth of its value.

If we consider the cost aspect, the reduction in Open Interest (OI) implies that demand for derivatives purchases has lessened. So, if the OI keeps decreasing, it’s reasonable to expect the price of XLM may dip below $0.45.

A bearish indicator for Stellar is its decreasing influence or prominence in cryptocurrency discussions, compared to the top 100 digital assets. This measure shows how many conversations are about it relative to other popular ones. An increase usually points to growing market interest and demand. However, when this metric decreases, it may indicate waning attention and potentially reduced demand.

Recently, the influence of XLM in social media circles stood at 3.13%. Yet, it’s noticeably decreased to 1.73%, suggesting that investors are now favoring alternative assets. Should this trend continue, it might result in additional declines in XLM’s price.

XLM Price Prediction: Push Back to $0.28 Likely

Should ongoing decreases in Open Interest (OI) and social dominance persist, Stellar Lumens (XLM) could find it challenging to maintain its recent growth spurt. On a daily scale, the Money Flow Index (MFI), which gauges buying and selling pressure, has seen a decline. The MFI determines if an asset is overbought or oversold by indicating whether more money is flowing into buying or selling.

If a reading exceeds 80.00, the market is considered overbought. Conversely, readings below 20.00 indicate oversold conditions. The chart shows that the MFI (Moving Average Finance Indicator) entered the overbought territory earlier before it corrected itself. Given the current state of XLM and its previous oversold condition, there’s a possibility that its price may drop to approximately $0.28.

If the price falls beneath the $0.22 resistance point, it may potentially drop to $0.17. Conversely, if there’s a surge in buying activity in both the derivatives and spot markets, this scenario might be avoided. Instead, XLM could ascend to $0.64.

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2024-11-27 11:42