Stellar (XLM) has given back ground after a strong run earlier this year. The token is down 16.1% in the past month, slipping 8.2% this week, and losing another 1.7% in the past 12 hours. Yearly gains still stand near 300%, but several bearish signals suggest sellers may have more room to press.
For long holders, the next few sessions could decide whether Stellar defends support or faces a steep correction.
Derivatives Weakness Cuts Support
One of the first warnings comes from the derivatives market. Open interest, which measures the value of active futures contracts, often shows how much leverage is behind a move. When open interest is high, traders can drive prices sharply in either direction, often triggering squeezes.
On July 18, Stellar’s open interest touched $588.53 million as the XLM price rallied. That buildup of leverage helped fuel the move, with short squeezes adding momentum. Since then, open interest has dropped to $306.22 million — a fall of almost 50%.
With fewer contracts in play, the chance of another squeeze-led rally weakens, leaving the market more exposed to spot selling.
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Bearish Crossover (s) Build Pressure
Spot momentum has also tilted negative on smaller timeframes, which often show early trend shifts.
On the 12-hour Stellar price chart, the 20 EMA or Exponential moving average (red line) crossed below the 50 EMA (orange line), a bearish signal that shows sellers have taken short-term control.
On the 4-hour Stellar price chart, the 50 EMA is close to crossing under the 200 EMA (deep blue line). A similar cross earlier this month preceded a drop. If confirmed, it would add another layer of selling pressure and strengthen the bearish bias.
Exponential Moving Average (EMA) is a moving average that gives extra weight to recent prices, so it reacts faster than a simple average. A bearish crossover occurs when a shorter EMA/MA moves below a longer one, indicating that sellers have the momentum.
Triangle Pattern Points To Stellar Price Breakdown Risk
On the daily Stellar price chart, XLM trades inside a descending triangle, a bearish continuation pattern marked by lower highs pressing against flat support.
Price sits near $0.39, just above key support at $0.38 and $0.36. If these levels fail, the lack of strong technical support points to a slide toward $0.23, a drop of nearly 40% from current levels.
Stellar now faces pressure from three sides: falling derivatives activity, bearish crossovers on short- and mid-term charts, and a descending triangle threatening a breakdown. Together, these setups highlight the risk of a 40% drop, unless buyers can quickly reclaim higher ground.
For buyers, the invalidation level is clear. A close above $0.43 would break the triangle to the upside, canceling the bearish setup and opening room for recovery. Until then, sellers remain in control.
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