- XLM has plenty of shorts to liquidate, and low volatility could surprise bears
- A +25% rise to $0.55 could make the bears suffer while the price action would cause the bulls to benefit.
Stellar Lumens (XLM) has faced significant liquidation pressure on short positions, suggesting a squeeze may be imminent. In fact, the heatmap revealed an accumulation of shorts at higher prices, indicating that any sudden upward trend in the price of XLM could trigger these liquidations.
Notably, XLM’s major liquidation thresholds were nearing around $0.45 and above, marking potential areas where bears could capitulate, which could propel prices higher.
Source: Alphractal
This tension between potential price increases and existing bearish bets could surprise short sellers, causing prices to rise quickly if these levels are breached.
This situation indicates the volatile nature of crypto markets, where sentiment can change dramatically – quickly affecting prices and traders’ positions. Additionally, XLM’s buying pressure spikes exceeded selling pressure, indicating bullish sentiment. XLM peaked in November with buying pressure momentarily exceeding selling.
However, the trend appeared to reverse as selling pressure slowly began to dominate again, hinting at critical resistance at $0.55. This +25% rise could hurt the bears, making it a key battle level for the bulls and bears.
Source: Alphractal
If XLM manages to break through this level, it could potentially initiate a rally, disappointing the bears. Conversely, a drop below the $0.398 support level could trigger a larger downtrend.
The alternating patterns of buying and selling pressure suggest that XLM could be very sensitive to trader sentiment, leading to increased volatility. A breach of these levels could result in significant price movements in either direction.
XLM Price Action and Forecast
At press time, XLM price action was showing an uptrend on the weekly charts, with the altcoin trading at $0.4390. XLM revealed a strong rise from its previous levels, approaching the $0.80 resistance level, which seemed key for continuation.
Strong candles breaking above descending resistance levels suggest potential for further uptrend if momentum continues.
The STH-MVRV at 2.48 implied that the price was significantly above the average holder’s break-even point. This suggests overvaluation, which could encourage some investors to take profits soon.
Source: Commercial View
If XLM manages to hold above this trendline, it could challenge the next major resistance at $0.80. However, any reversal could see support at the lower end near $0.33. This outlook is cautiously optimistic, but traders should watch for signs of reversal due to the high MVRV ratio.
Finally, large inflows peaked at around $20 million on November 18, with subsequent high volumes influencing price fluctuations, particularly in December.
Frequent shifts from net inflows to outflows suggest active trading and potential short-term speculation among investors.
Source: Coinglass
Historically, strong capital inflows often precede price surges, as was the case in early December. These changes, combined with increased capital inflows, could likely push prices up temporarily.
