Why Stellar's (XLM) Price Could Face a 28% Decline

As tensions rise between the United States and Iran, the overall cryptocurrency market is experiencing notable pressure. Within this turbulent environment, Stellar (XLM) appears poised for additional downside risk.

Key Takeaways

Stellar (XLM) is under pressure amid rising geopolitical tensions.
On February 28, XLM saw a significant drop of over 9.95%, reaching $0.1486.
Key support levels identified are $0.147, $0.078, and $0.041.
A bearish head-and-shoulders pattern has formed, indicating possible further declines if XLM falls below $0.145.
Current trading data shows $296,000 in long and $1.49 million in short positions, suggesting a bearish sentiment.
Despite the current bearish outlook, there may be buying opportunities for long-term holders.

Here's why Stellar's (XLM) price action may be at the risk of a 28% drop

However, the factors influencing XLM's price are not solely related to geopolitical unrest. The cryptocurrency is also facing challenges due to the emergence of a bearish price pattern in its market charts.

On February 28, XLM's value dropped by over 9.95% within a single day, reaching a price of $0.1486. Interestingly, this price decline coincided with a substantial increase in trading activity, as reflected by a 17% rise in trading volume, reaching $125.89 million.

XLM Price Movements and Key Levels to Monitor

Despite the prevailing market uncertainty, well-known crypto analyst Ali Martinez recently highlighted crucial support levels for XLM in a post on X. He identified $0.147, $0.078, and $0.041 as significant points of interest for this altcoin.

XLM price prediction chart Source: X/alicharts

Looking at the daily chart reveals that XLM has developed a bearish head-and-shoulders pattern beneath the critical support level of $0.158. If the downward trend persists and XLM closes a daily candle below the $0.145 level, we could see a potential price drop of 28%, taking it down to the $0.105 level in the following days. However, this bearish outlook would only be confirmed if XLM closes below the $0.145 mark; otherwise, the bearish thesis may be invalidated.

XLM price action Source: TradingView

At the time of writing, the Average Directional Index (ADX), which assesses trend strength, stood at 30.40, signifying strong momentum since it is above the crucial threshold of 25.

Mixed Sentiments in Derivatives Tools

An examination of market structure indicates that long-term holders might be utilizing this dip as a buying opportunity, while short-term traders seem to be capitalizing on prevailing trends by heavily wagering on short positions.

According to the derivatives platform Coinglass, intraday traders are focusing on support at $0.149 and resistance at $0.1619. They have accumulated $296,000 in long-leveraged positions and $1.49 million in short-leveraged positions. This data suggests that traders with a bearish outlook dominate the current market, anticipating that XLM's price will not surpass the $0.1619 level in the near future.

XLM Exchange Liquidation Map Source: Coinglass

In contrast, the XLM spot inflow/outflow metric indicates that $319,790 worth of the asset has exited exchanges over the last 24 hours, hinting at potential accumulation.

XLM Spot Inflow/Outflow Source: Coinglass

By integrating these various metrics, it appears that XLM is facing short-term bearish pressure. However, there may be an optimal buying opportunity on the horizon for long-term investors.