Will XLM Open Interest Affect the Altcoin’s Price?
star (XLM) surged over 100% over the past week, but now open interest has dropped sharply. The decline in XLM open interest points to waning enthusiasm among derivatives traders and could signal that the recent rally is losing momentum.
While holders may remain optimistic, On-chain analysis This suggests that if current market conditions do not change, the price of XLM could face a significant correction.
Stellar market dominance fails
On November 24, XLM open interest climbed to over $339 million, setting a new all-time high. as As reported earlier, The huge interest in altcoins has been linked to the surge in the price of Ripple (XRP).
However, as of this writing, OI, as it’s often abbreviated, has dropped to $209 million. This drop indicates that traders have liquidated $130 million worth of previously open positions. As expected, this decrease correlates with XLM price dropscausing it to lose 10% of its value in the past 24 hours.
From a price perspective, the decline in OI means Buying pressure Derivatives markets declined. Therefore, if the OI value continues to decline, the price of XLM may fall below $0.45.
Another bearish sign for Stellar is its declining social dominance. This metric evaluates the proportion of discussion about cryptocurrencies compared to the top 100 assets. When social dominance rises, it usually indicates Market interest surges and needs. Conversely, a decline indicates less attention and possibly less demand.
Currently, XLM’s social dominance is 3.13%. However, the ratio has dropped significantly to 1.73%, which means market participants are turning their attention to other assets. If this trend continues, it could cause XLM price to fall further.
XLM Price Prediction: A possible pullback to $0.28
If OI declines and social dominance continues, XLM could be in trouble to maintain recent gains. On the daily chart, the Money Flow Index (MFI) reading has declined. The MFI measures buying and selling pressure and determines whether an asset is overbought or oversold.
When a reading is above 80.00, it is overbought. But when it’s below 20.00, it’s oversold. As seen below, MFIs hit overbought territory earlier before pulling back. taking into account current situationthe price of XLM may drop to $0.28.
However, a break below the $0.22 support could push the price down to $0.17. On the other hand, this may not happen if buying pressure increases in derivatives and spot markets. instead, XLM may rebound to $0.64.
Disclaimer
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