The altcoin Stellar (XLM) has fallen to the level of $0.249 with an approximate 25% loss in value it has experienced in recent weeks. Although social media sentiment and derivative market data indicate signs of recovery, these positive developments have not yet reflected in price movements. The ability of the price to rise seems to depend on overcoming liquidity risks and improving overall market conditions.
XLM, the main network token of Stellar, which is considered XRP's most serious competitor, has recently experienced a sharp decline. Currently trading at $0.249, the altcoin has lost around 7% of its value in the last 24 hours. Since mid-May, XLM has lost more than a quarter of its market value and is moving within a falling wedge formation. The price, which has fallen below the critical support level of $0.26, is negatively affected by increasing geopolitical uncertainties and overall market anxiety.
However, the negative atmosphere in the community is slowly giving way to more positive expectations. According to Santiment data, XLM's total weighted sentiment score has risen from -0.775 to +0.192 this week. Particularly, on June 17, positive messages on social media reached a level of 11.31, while negative messages remained at just 0.81. This indicates that there is a noticeable optimism for the altcoin on social media.
There are signs of recovery in derivative markets as well. The weighted funding rates for open positions in XLM have significantly improved throughout the past week. The funding rate, which was approximately -0.378% on May 13, has now risen to a slightly positive level of 0.0029%. Behind this positive development are news of PayPal's integration of the PYUSD stablecoin into the Stellar network and potential collaboration with EasyA to provide cost-effective cross-border payment services to SMEs. However, all these positive signals have not yet translated into a meaningful rise in the XLM price.
One of the biggest obstacles to the recovery of the XLM price is the liquidity situation. The current liquidity heat map shows that the price is at the lower end of the liquidity pool. If the price breaks down further, this could lead to a long squeeze, causing XLM to drop to deeper lows. This technical risk poses a significant threat to the altcoin's short-term performance.
On the other hand, there is potential for improvement in market conditions. A softening may occur depending on the outcomes of Donald Trump's ultimatum to Iran concerning the geopolitical tensions in the Iran-Israel region. If tensions in the Middle East decrease, the XLM price may find support around the liquidity level of $0.25 and seize the opportunity for an upward movement.
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