The recent activity surrounding Stellar Lumens (XLM) has raised concerns, particularly regarding the pressure on short positions, indicating a potential upcoming squeeze. Analysis shows a clustering of short positions at higher price levels, suggesting that any sudden surge in XLM’s value could trigger forced liquidations.
Key liquidation thresholds for XLM are hovering around the $0.45 mark and above, presenting areas where bearish investors might be forced to cover their positions, potentially driving prices higher.
The conflict between the possibility of price surges and existing bearish positions could catch short sellers off-guard, leading to rapid price spikes if certain levels are breached.
This scenario highlights the volatile nature of cryptocurrency markets, where sentiment can swiftly shift, impacting prices and traders’ positions. Notably, spikes in buying pressure for XLM have surpassed selling pressure, indicating a prevailing bullish sentiment. In November, there was a peak where buying pressure momentarily surpassed selling.
Nevertheless, the trend appears to be reversing as selling pressure begins to regain control, hinting at a significant resistance level around $0.55. A potential uplift of 25% could result in losses for bears, making this price point a battleground for bulls and bears.
If XLM manages to surpass this threshold, it may kickstart a rally, disappointing those betting against it. Conversely, a drop below the support level of $0.398 could signal a more substantial downtrend.
The fluctuating patterns of buying and selling pressure indicate XLM’s sensitivity to trader sentiment, leading to heightened volatility. Breaching these levels could result in notable price fluctuations in either direction.
XLM’s Current Price Action and Future Projections
At present, XLM’s price action reveals a bullish trend on weekly charts, with the altcoin trading at $0.4390. XLM has shown a significant uptick from previous levels, nearing the crucial $0.80 resistance level, which is pivotal for further advancement.
The strong bullish candles surpassing descending resistance levels indicate the potential for continuous upward movement if the momentum persists.
The short-term holder MVRV ratio of 2.48 suggests that the price is well above the average holder’s breakeven point, hinting at possible overvaluation that might prompt some investors to secure profits shortly.
If XLM can uphold its position above this trendline, it could challenge the next notable resistance at $0.80. Conversely, a reversal might find support around $0.33. The outlook remains cautiously optimistic, but caution is advised due to the high MVRV ratio signaling potential for a reversal.
Recently, a substantial inflow peaked around $20 million on 18 November, with ensuing high volumes influencing price fluctuations, particularly in December.
The frequent transitions from net inflows to outflows indicate active trading and potential short-term speculation among investors.
Historically, significant inflows often precede price surges, as evident in early December. These shifts, coupled with heightened inflows, could potentially drive the price up temporarily.