Stellar (XLM) recovers, the bulls approach the breakout point of the trendline

Stellar (XLM) is trading at around $0.155 USD at the time of writing on Wednesday, after a slight rebound from the previous day. Although an upward trend is forming, mixed signals from on-chain data and derivatives markets indicate that trader sentiment remains cautious, reflecting investors’ hesitation toward XLM. From a technical perspective, the bullish outlook could be strengthened if XLM successfully breaks above the current downtrend, opening the possibility for short-term gains.

Mixed On-Chain and Derivatives Data Show Hesitation

Stellar’s on-chain data initially signals positive signs. According to Santiment analytics platform, the Social Dominance index—measuring the proportion of discussions related to XLM across crypto media—has steadily increased since late February, reaching 0.029% on Tuesday, the highest since February 4. This upward movement suggests growing market attention toward XLM and reflects a more optimistic investor sentiment.

XLM Social Dominance Chart | Source: Santiment However, the overall picture remains unclear. Data from CryptoQuant indicates that the general outlook is still neutral, despite some early bullish signals. The appearance of large trades from “whale” groups offers slight positive expectations for XLM. Nonetheless, many key indicators across spot and futures markets still show caution and hesitation among traders.

In the derivatives market, signals lean toward a bearish scenario. The XLM funding rate remains negative, and the number of short positions is increasing. According to OI-Weighted Funding Rate data from CoinGlass, more traders are betting that Stellar’s price will continue to decline than those expecting an increase. This indicator has been in negative territory since Friday and stayed around -0.006% on Wednesday. This suggests short positions are paying fees to long positions—often a sign of bearish market sentiment.

XLM Funding Rate Chart. Source: CoinGlass Additionally, the long/short ratio for Stellar during this period is only 0.77; a figure below 1 indicates more traders are leaning toward a bearish scenario.

XLM Long/Short Ratio Chart | Source: CoinGlass The divergence between somewhat positive on-chain data and bearish derivatives signals indicates market sentiment remains divided. This hesitation could hinder the sustainability of a solid recovery for XLM in the short term.

Stellar Price Forecast: XLM Could Extend Gains if It Breaks the Downtrend