Open interest (OI) in XLM has seen a sharp increase, skyrocketing 127% to 346 million dollars from 160 million dollars just last week. This increase in OI indicates that investors are more engaged, likely driven by FOMO (fear of missing out).
The growing interest in the asset aligns with a positive funding rate, suggesting that traders remain optimistic about XLM's potential.
The increase in open positions indicates that confidence is growing, which could prevent a sharp price drop. However, such rapid growth could also lead to short-term overextension, so market participants should be cautious.
The Chaikin Money Flow (CMF) indicator for XLM also signals strong inflows, showing that money is consistently entering the market. This bullish trend reflects positive investor sentiment and a growing belief in Stellar's long-term potential.
However, historically, when the CMF crosses the 20.0 threshold, it indicates overbought conditions, which could lead to a price correction.
As XLM continues to experience significant optimism, the risk of overheating increases, and a cooling period could be imminent. Investors should closely monitor these technical indicators for signs of a possible price correction.