In the current volatile market conditions, XLM, the native token of Stellar, is showing signs of bearish sentiment and is potentially facing a significant price decline. This negative outlook is reinforced by intraday traders who are heavily favoring short positions, as highlighted by the on-chain analytics firm CoinGlass.
As of February 6, 2024, the on-chain data from the XLM exchange liquidation map reveals a stark contrast between long and short positions. Long positions are currently over-leveraged at the $0.3057 level, with $2.26 million worth of positions, while short positions dominate at $0.355, with $5.25 million worth of positions. This imbalance suggests that traders are anticipating a downward movement in XLM’s price.
If market sentiment shifts, these heavily leveraged positions could be liquidated, further exacerbating the bearish pressure on XLM. The prevailing negative sentiment can be attributed to the bearish price action of XLM and the ongoing economic tensions between the United States, Mexico, Canada, and China.
Technical analysis indicates that XLM has formed a bearish inverted cup and handle pattern on the daily chart, signaling a potential support or neckline breakdown. Should XLM fail to hold the $0.32 level or breach the neckline, there is a strong likelihood that the price could plummet by 40% to reach the $0.20 level in the near future.
Despite the bearish outlook, XLM is still trading above the 200 Exponential Moving Average (EMA) on the daily chart, suggesting that the asset is in an overall uptrend.
At present, XLM is trading around $0.33, experiencing a price decline of over 7.50% in the last 24 hours. However, the trading volume has decreased by 30% during the same period, indicating a sense of caution among investors and a reluctance to push the price further down.
In conclusion, the current market conditions suggest that XLM is facing significant downward pressure, with traders heavily favoring short positions. The technical analysis points to a potential price decline if key support levels are breached. Investors should closely monitor market developments and adjust their strategies accordingly to navigate the volatile environment effectively.