Stellar Lumens' price potentially in jeopardy due to plummeting funding rate.
In a surprising turn of events, Stellar Lumens (XLM) is currently under pressure, with the token showing signs of potential further downside, despite strong on-chain growth and solid network fundamentals.
The primary concerns stem from a sustained negative funding rate and a significant price drop below key moving averages, both of which indicate growing bearish pressure in the market.
For XLM, a negative funding rate—a fee exchanged between long and short traders in perpetual futures markets—has remained negative for most of the time since May 2025. This imbalance suggests more traders are shorting the token than holding long positions, with short sellers paying longs. This bearish sentiment contrasts sharply with the positive on-chain activity that the network has been experiencing.
XLM’s price has also plunged significantly, dropping about 35% from its May high and 62% from its 2024 peak. The token recently breached the 50-day and 100-day exponential moving averages (EMAs), technical indicators that often act as support levels. A move below these levels typically suggests further downside momentum, with analysts pointing to $0.15 as a next critical support, which would be roughly 36% below current prices.
However, it's worth noting that Stellar's network activity and fundamentals show robust growth and promising adoption. In the last five consecutive months, the number of transactions on the network increased to 18.2 million, active addresses rose by 10% to nearly 147,000, and the stablecoin supply on Stellar reached a record $667 million. Additionally, the total value locked in real-world asset tokenization has risen to $487 million, with a significant portion due to the Franklin OnChain US Government Money Market Fund.
Despite these positive developments, the market price does not yet reflect these positive fundamentals due to prevailing negative trader sentiment and speculative pressure. The key challenge is that market sentiment and speculative trading dynamics are currently outweighing the positive on-chain developments.
In conclusion, while Stellar’s network activity and fundamentals show robust growth and promising adoption, the market's negative perception—reflected in the continuous negative funding rate and price decline below technical supports—strongly suggests further downside risk for XLM in the near term. The key challenge is that market sentiment and speculative trading dynamics are currently outweighing the positive on-chain developments. Investors are advised to closely monitor the situation and make informed decisions based on the latest market trends and developments.
- Despite the strong on-chain growth and solid network fundamentals of altcoins like Stellar Lumens (XLM), the negative funding rate in the crypto market and the token's significant price drop below key moving averages have raised concerns, hinting at potential further downside for XLM.
- The bearish sentiment towards XLM, as indicated by the negative funding rate and the token's price decline, contrasts sharply with the positive on-chain activity such as increased transactions, growing active addresses, and a rising stablecoin supply, the latter reaching a record $667 million on the Stellar network.
- Interestingly, while Tron and other altcoins are experiencing negative trader sentiment and speculative pressure, their on-chain developments such as Stellar's robust network activity and promising adoption are seemingly going unnoticed, causing a disparity between their market price and their positive fundamentals.
