Stellar [XLM] is under growing pressure as bearish signals strengthen across both price and derivatives markets. After two consecutive days of losses, the altcoin has formed a Death Cross pattern on the daily chart, heightening the risk of a 15% correction toward the $0.22 support area.
The decline comes as trader confidence fades and retail demand softens, with futures market data revealing a notable drop in activity.
Traders Lose Confidence as Open Interest Declines
According to CoinGlass, XLM futures Open Interest (OI) fell to $118.98 million on Wednesday — its lowest level since mid-April. This sharp decline signals that traders are either reducing exposure, closing leveraged positions, or being liquidated amid growing downside pressure.
The reduction in OI reflects cooling retail participation, as speculative traders step back from riskier altcoin positions following renewed market volatility.
“Retail traders appear to be stepping aside as Stellar loses short-term momentum,” noted one analyst. “The falling Open Interest highlights a shift from leverage-driven speculation to cautious positioning.”
Analyst Peter Brandt Warns of Further Downside
Veteran market analyst Peter Brandt has also weighed in on the technical setup, posting a chart that depicts a descending triangle pattern on the daily timeframe.
According to Brandt, this breakdown continues a larger bearish structure that began forming in early October. While no specific price target was mentioned, his chart highlighted rising bearish momentum, confirmed by an Average Directional Index (ADX) reading of 37 — typically a sign of trend strength.
The technical breakdown adds weight to bearish sentiment already forming after XLM slipped below key moving averages.
Technical Picture: Death Cross and Falling Momentum
As of writing, Stellar trades just above $0.27, recovering slightly after two days of heavy selling. However, the rebound may prove temporary as the daily chart paints a distinctly bearish picture.
The 50-day Exponential Moving Average (EMA) has crossed below the 200-day EMA, creating a Death Cross — a classic technical indicator of a prolonged downtrend.
At the same time, both momentum indicators confirm the dominance of sellers:
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The Relative Strength Index (RSI) sits around 30, hovering near oversold territory but still pointing downward, showing strong selling pressure.
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The Moving Average Convergence Divergence (MACD) continues to trade below the signal line, extending its decline and reinforcing bearish momentum.
This confluence of factors indicates that XLM could remain under pressure in the short term, especially if broader crypto sentiment remains weak.
Price Levels to Watch
Stellar’s recent breakdown from a falling channel pattern suggests a potential move toward the $0.22 support zone, representing a 15% downside from current levels.
The $0.22 area has historically acted as a strong demand zone, providing key support during prior retracements. A clean break below that threshold could open the door to further losses.
However, if XLM manages to reclaim $0.2851 — the high from June 11 — analysts say it could trigger a short-term relief rally toward the $0.30 psychological level, though resistance is expected to remain strong at those levels.
Broader Market Sentiment
XLM’s decline mirrors a broader downturn across the crypto market, where Bitcoin and Ethereum both face renewed selling pressure amid tightening liquidity and risk-off sentiment.
As institutional inflows slow and speculative appetite weakens, smaller-cap tokens like Stellar often experience sharper volatility.
Still, some long-term investors remain optimistic about XLM’s cross-border payment capabilities and partnership potential, noting that short-term technical weakness does not necessarily undermine its long-term use case.
Outlook: Short-Term Bearish, Long-Term Uncertain
For now, the outlook for Stellar remains cautiously bearish, with downside risks dominating short-term charts. The emergence of a Death Cross, coupled with softening Open Interest, points toward a continuation of the correction phase unless broader market dynamics improve.
Should the price hold above $0.27 and regain $0.29 in the coming sessions, it could signal the early stages of stabilization. Otherwise, traders may brace for another leg lower toward $0.22, aligning with the broader market retracement.
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