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Stellar’s native token, XLM, has seen a sharp decline in the past 24 hours, losing over 10% of its value and currently trading near $0.41. This sudden drop has alarmed investors, especially after XLM had shown signs of recovery earlier in the month. With technical indicators flashing warning signals and long positions getting liquidated, the question on every trader’s mind is: should you sell, hold, or wait for a potential rebound?
A Sharp Correction After a Strong Start
Earlier this month, XLM gained momentum due to positive sentiment around stablecoin adoption and broader market optimism. It recorded a weekly gain of over 12%, and some analysts even predicted a bullish golden cross formation. However, the recent price action has reversed much of those gains.
In the last 24 hours, XLM dropped by 10.84% and is now hovering around $0.4168. What’s more concerning is that the token has broken below multiple key support levels, which increases the chances of further downside. The trading volume also spiked by more than 70%, hitting $1.02 billion, indicating panic selling and high volatility.
Oversold Signal from RSI and Technical Breakdown
From a technical perspective, XLM is showing signs of a weakening structure. The price has fallen below the 23.6% Fibonacci retracement level at $0.44, as well as the 30-day exponential moving average (EMA) around $0.41. These are important indicators that usually suggest a reversal point, but XLM has failed to hold them.
The Relative Strength Index (RSI), which measures whether an asset is overbought or oversold, has dropped to 28.14. Any value below 30 typically indicates that the asset is oversold. This could mean a potential bounce may happen soon—but only if buyers step in with enough volume to support the price.
In addition, XLM has fallen below the lower Bollinger Band, another bearish signal suggesting the asset is experiencing high volatility and could be entering a deeper correction phase.
$0.40 – The Key Level to Watch
Currently, the most critical support level for XLM is at $0.40. If the price breaks below this zone, it could open the door for a steeper drop, potentially toward $0.32. This $0.32 area aligns with the 61.8% Fibonacci retracement from XLM’s recent rally in July, making it a significant target for traders watching the next move.
On the other hand, if buyers defend the $0.40 level, there’s a chance XLM could rebound toward the $0.44 and $0.47 resistance zones. Regaining these levels would be essential for the bulls to regain control and reverse the current downtrend.
On-Chain Metrics Reveal Rising Liquidation Risk
On-chain data from CoinGlass shows that the recent drop in XLM price is closely linked with a sharp rise in long liquidations. Between July 11 and July 17, both long and short positions saw spikes in liquidations, reflecting heightened market volatility.
More recently, long liquidations have picked up pace, especially around the $0.40 level. This suggests that many traders who entered during the July rally overleveraged their positions and are now being forced out as prices drop.
Currently, more than $79 million in long positions are at risk of liquidation, compared to $42 million in short positions. The 11.6% fall in open interest also points to reduced trader confidence, with many investors choosing to scale back their exposure.
Should You Sell, Hold, or Wait?
With all these bearish signals, it’s understandable that traders are questioning whether to cut losses or wait it out. While technical and on-chain data both suggest more downside risk if $0.40 fails, the oversold RSI could indicate a potential short-term bounce.
For cautious investors, it might be wise to wait for confirmation that the $0.40 support will hold. If the price stabilizes above this level with improving volume, it could present a buying opportunity. However, if the breakdown continues, a retest of $0.32 seems likely.
In short, Stellar is at a crucial juncture. A rebound is possible, but the pressure on support levels and liquidation trends show that sellers are still in control. Traders should stay alert, watch support and resistance levels closely, and manage risk carefully in the coming days.
