• XLM Open Interest drops from ATH of $339M to $209M
• Social dominance declines from 3.13% to 1.73%
• Technical indicators suggest potential retracement to $0.28

Stellar (XLM) has experienced a significant shift in market dynamics following its impressive 100% surge last week.

The cryptocurrency’s derivatives market shows clear signs of cooling, with Open Interest (OI) dropping dramatically from its all-time high of $339 million to $209 million, signaling a potential end to its recent bullish momentum.

The sharp decline in Open Interest represents the closure of derivative positions worth approximately $130 million, coinciding with a 10% price decrease in the last 24 hours.

This reduction in derivatives market activity typically suggests diminishing buying pressure, raising concerns about XLM’s ability to maintain prices above the $0.45 level.

XLM’s social dominance raises concerns

Adding to the bearish outlook, Stellar’s social dominance metrics paint a concerning picture. The indicator, which measures discussion volume relative to the top 100 cryptocurrencies, has plummeted from 3.13% to 1.73%.

This significant decrease suggests market participants are shifting their attention elsewhere, potentially leading to reduced demand for XLM.

Technical analysis further supports the possibility of continued downside. The Money Flow Index (MFI) has retreated from overbought territory, traditionally a precursor to price corrections.

If current market conditions persist, XLM could find itself testing support at $0.28, with further potential downside to $0.17 if the $0.22 support fails to hold.

However, the situation isn’t entirely bearish. A revival in buying pressure across both derivatives and spot markets could invalidate this bearish outlook, potentially driving XLM toward the $0.64 level.

The coming days will be crucial in determining whether Stellar can maintain its recent gains or succumb to mounting selling pressure.