Stellar Lumens (XLM) Faces Further Downside as Funding Rate Hits New Lows

XLM Experiences Growing Bearish Pressure Despite Stellar's On-Chain Strength

The price of Stellar Lumens (XLM), one of the leading blockchain-based payment tokens, is under renewed pressure as its funding rate plunges, signaling a potential for further losses. While the Stellar network continues to demonstrate impressive blockchain adoption and increased utility—including surging transaction volumes, robust stablecoin supply, and expanding real-world asset tokenization—market sentiment remains bearish for XLM.

Funding Rate Crash Highlights Mounting Short Interest

Over recent days, Stellar Lumens’ funding rate has declined sharply, reaching its lowest point since June 30. In cryptocurrency derivatives trading, the funding rate is the fee exchanged between long and short positions in perpetual futures contracts to keep prices aligned with spot values. A consistently negative funding rate reflects an overwhelming presence of short sellers versus long buyers, often indicating traders are betting on continued price falls for XLM.

XLM’s negative funding rate has persisted for most days since May, reinforcing the outlook of sustained bearish sentiment in the futures market. Despite ongoing network achievements, this negative market behavior has pushed XLM’s token price to a key technical level.

Stellar Price Falls to Key Support Level

This week, the price of XLM dropped to a critical support at $0.2175, marking a 35% retreat from its May peak and a staggering 62% decline from its highest point in 2024. The move brings the token into close proximity with a major support zone, coinciding with April’s lows when many alternative cryptocurrencies suffered major declines.

On the daily price chart, XLM is testing the lower boundary of a descending triangle—an established bearish technical pattern. The token has also slipped below key technical indicators, such as the 50-day and 100-day Exponential Moving Averages, and broken past the 61.8% Fibonacci retracement level, where recoveries often begin. If the $0.2175 support fails, XLM could experience a steeper decline toward the next significant target at $0.15, a potential 36% drop from current levels.

Network Fundamentals Stay Strong Amid Price Weakness

Despite the challenging price action, third-party analytics underline Stellar’s growing blockchain ecosystem. According to Artemis, operations on the Stellar network surged to 197 million in June. Meanwhile, stablecoin supply soared to an all-time high of $667 million, reflecting increasing demand for digital dollar equivalents on-chain.

Tokenization of real-world assets (RWA) on Stellar has also boomed, with the total value locked reaching $487 million, spurred by products like the Franklin OnChain US Government Money Market Fund. Nansen data further reveals active network participation, with transactions up 11% week-over-week to 18.2 million and active Stellar addresses climbing 10% to 146,700.

Summary

While Stellar Lumens’ network growth remains strong, persistent bearish futures sentiment and technical breakdowns have pushed XLM to a pivotal price level. A failure to hold current support could see XLM experience further downside, despite the blockchain’s expanding on-chain activity. Crypto traders and investors should monitor both on-chain fundamentals and funding trends for signs of market reversal or renewed weakness.