During the last week of May, the native token Stellar (XLM) increased by 102%, from $0.147 to $0.297.
Since then, token prices have declined by 37.8% to below $0.20. Over the past 24 hours, XLM lost 6.38% and its open interest decreased by 9.2%.
The combined decline in OI and price, along with an increase in daily trading volume, indicated increased selling pressure and panicked market conditions.
The initial rally was boosted by the news that the chain was selected by the Depository Trust and Clearing Corporation (DTCC) for its tokenization plans.
It appears that subsequent demand was weak, leading to a deep retracement. The spot taker’s CVD measures aggressive buying and selling over 3 months, and it has moved from a buyer-dominated phase to more neutral conditions.
As Bitcoin (BTC) threatens to fall back below the $60,000 level, it is unclear what XLM’s next move would be.
Examining the two bullish arguments in favor of XLM
Since February, XLM has been trading in a range bounded by $0.143 and $0.183. The breakout at the end of May broke the bearish structure as well as the range. At the time of writing, the high of the old range was being retested as support.
The 78.6% retracement level of the upward move at $0.173 was also a viable support level for XLM.
The CMF was in neutral territory, showing that capital flows were dominated by neither buyers nor sellers. However, the A/D indicator recently fell to new lows and the RSI was dropping below neutral 50 at press time.
Together, the indicators show that sellers have the upper hand.
Traders’ Call to Action – Buyers Remain Cautious
The range high of $0.183 has already received a positive reaction on Friday, June 5. This price rebound was unable to rise above $0.218 before falling back.
This situation was still advantageous for the bears in the short term. XLM’s breakthrough rally, driven by the DTCC announcement, may not be over yet.
Final summary
- The price of Stellar’s utility token doubled days after DTCC announced it had chosen blockchain for its tokenization plans.
- The bullish range breakout and structural breakout experienced a rapid retracement and the selloff was not yet complete.
