- Stellar Lumens price drops 16% from its YTD high as technical indicators point to a likely mean reversion correction.
- Stablecoin data was overstated due to the reclassification of fund assets, reducing real network growth figures significantly.
- Futures open interest in XLM shows a declining trend, suggesting fading investor confidence in near-term price strength.
On July 15, the Stellar Lumens (XLM) price plunged to $0.4300. This is a 16% decline as compared to its high so far this year. The downward trend is in the context of the continuing slowdown of the rally of the overall cryptocurrency market.
The token had surged last week to $0.5145, but technical indicators began flashing red. Overbought signals appeared on both the Stochastic and Relative Strength Index (RSI), suggesting a possible pullback.
Mean Reversion Signals Extended Correction
XLM is currently trading far above key moving averages. The 50-day and 100-day averages sit at $0.2900 and $0.2837, respectively. This distance raises the possibility of a mean reversion event.
Historically, similar price patterns have led to sharp retracements. A comparable situation occurred in November last year, when the token corrected over several months after a steep rally.
Price Deviates from Long-Term Trend Channel
Besides moving averages, XLM has broken above a descending channel that has held since December. While this could signal bullish sentiment, a retest of previous resistance is common.
This tendency is accompanied by the price returning to the breakout level, even before achieving any further increases; thus, it is called a break-and-retest. According to analysts, the token may drop by 40%, which will bring it close to important support levels.
Recent reports from DeFi Llama have shown Stellar’s stablecoin supply climbing to $652 million, which raised optimism about its network growth. However, a closer review reveals that this figure includes $441 million from the Franklin Onchain U.S. Government Money Fund.
Without this fund, the actual stablecoin supply on Stellar is just $185 million. USDC represents $180 million of this amount, with EURC adding another $1.92 million.
Falling Open Interest Adds More Pressure
Futures data shows open interest in XLM has declined. On Tuesday, it dropped from $520 million to $495 million. Declining open interest often indicates that a price top may be forming.
The combination of cooling technicals, market corrections, and questionable data classifications could drive XLM further down before any possible rebound.
