Stellar Price Crashes 7% As Open Interest Nosedives

Stellar price continues to struggle to climb above the psychological point at $0.50 as the mood in the crypto industry sours. Bitcoin has plunged to $92,000, while the market cap of all coins has fallen by 3.5% in the last 24 hours to $3.15 trillion. XLM’s futures open interest and weekly transactions have fallen, pointing to more downside this week.

Stellar Price Falls As Open Interest Retreats

The XLM price continued its downtrend amid waning demand in the spot and futures market as the crypto sentiment worsened. According to CoinGlass, the futures interest has dropped to over $224 million, down from the year-to-date high of $307 million. 

Futures open interest is a gauge that looks at all open call and put trades in the market. A call option gives a trader a right but not the obligation to sell, while a put gives them the right and not to sell at the strike price. In most cases, cryptocurrency futures open interest rises when a coin is in an uptrend. 

In other instances, some contrarians take the falling open interest as a good buying opportunity. For example, as shown below, the interest almost dried up in the third and some part of the fourth quarter of last year. The coin then went parabolic in November, soaring by almost 500%.

Stellar price has also fallen as on-chain data show that the number of weekly transactions continued falling. These transactions peaked at over 90 million in 2023 and have dropped to below 40 million.

XLM Price Analysis: Technicals Send Mixed Signals

The daily chart shows that the Stellar price is sending mixed signals. On the positive side, the token formed a falling wedge chart pattern between December 2 and 31, explaining why it made a strong bullish breakout earlier this month. Also, the XLM price has continued to be supported by the 50-day and 100-day moving averages.

Further, there are signs that it is forming a small bullish flag pattern. This popular pattern comprises a vertical line and some consolidation and is a common continuation sign. Therefore, while the coin has pulled back, it is likely to bounce back and possibly move to the psychological point at $0.50, up by 26% above the current level. 

On the risky side of the bearish XLM price prediction, there are signs that it has faced substantial resistance at $0.4850.

As such, a drop below the 50-day moving average at $0.3160 will point to more downside, potentially to the 100-day moving average at $0.3163.