Stellar Lumens (XLM) Drops 35% as Bearish Sentiment Persists

Stellar Lumens (XLM) is currently facing a significant risk as its funding rate remains in negative territory, indicating a bearish sentiment that could extend its decline toward the $0.15 level. The token has fallen below key technical levels, breaking past the 50-day and 100-day Exponential Moving Averages (EMAs) and the 61.8% Fibonacci retracement zone. This technical breakdown suggests a weak price structure and a potential for further downside.

The price of XLM declined to a significant support level at $0.2175 this week, marking a 35% drop from its May peak. The token is also dropping by 62% from its peak, to be realized in the year 2024. The fall is against a background of a negative funding rate staying constant, and it is an indication that a bearish mood is still prevalent in the market. Data shows the funding rate for XLM fell to its lowest level since June 30. It has stayed negative on most days since May. A negative funding rate indicates more traders are holding short positions and are paying fees to those holding long positions. This trend typically reflects expectations of further downside. If the $0.2175 support breaks, XLM could drop as low as $0.15, suggesting a potential 36% loss.

Despite the bearish trend in price, on-chain data indicates steady network growth. The number of operations on the Stellar network reached 197 million in June. At the same time, the supply of stablecoins on the network hit a record high of $667 million. The tokenization of real-world assets on Stellar has also grown, with a total value locked now standing at $487 million. This growth in network activity and stablecoin supply suggests that the underlying fundamentals of the Stellar network remain strong, despite the current market pressures.

Active usage on the Stellar network has also been on the rise, with an 11% increase in network transactions over the last seven days, totaling 18.2 million. The active addresses increased by 10% to 146,700 in the same period. Such numbers indicate an increasing discrepancy between the network performance and the market cap of the Stellar tokenization. This discrepancy suggests that the market may be undervaluing the potential of the Stellar network, despite the current bearish sentiment.