XLM Plunges 14%, Bearish Outlook Looms

Stellar's XLM token has experienced a significant decline, falling below a crucial support level and raising concerns about a potential 32% crash. On the 25th of February 2025, XLM recorded a 14% drop, failing to maintain the $0.31 support level, which has historically been a strong indicator of price reversals. Following this decline, XLM was trading near the $0.279 level, with a trading volume surge of 85%, indicating increased participation from traders and investors.

Technical analysis by AMBCrypto suggests that XLM's breach of the $0.31 support level has confirmed a bearish outlook. This breakdown in support, coupled with the bearish confirmation, increases the likelihood of a 32% decline to the $0.19 level in the coming days. Additionally, the asset's bearish price action is reinforced by its breach of the support of the 200 Exponential Moving Average (EMA) on the daily timeframe.

Despite the overall bearish market sentiment and XLM's continuous price decline, investors and long-term holders have been accumulating the token. On-chain analytics firm Coinglass reports that exchanges have witnessed an outflow of $7.10 million worth of XLM in the past 48 hours. Such outflows during a weak market sentiment can create buying pressure and drive further upward price momentum.

Intraday traders, however, are taking advantage of the current market sentiment by betting on the short side. Data from Coinglass reveals that traders betting on short positions are currently dominating, with those betting on long positions appearing to be exhausted. At press time, traders betting on the long side are overleveraged at $0.272, with $802.5K worth of long positions. Meanwhile, traders betting on the short side are overleveraged at $0.306, with $3.42 million worth of short positions.

Combining these on-chain metrics with technical analysis, it appears that long-term holders and investors are taking advantage of the recent price drop, potentially executing a "buy the dip" strategy. Meanwhile, XLM traders seem to be following market sentiment, using leveraged positions to bet significantly on the short side.