Stellar (XLM) Price Alert: Wedge Breakdown Looms as Open Interest Tanks – Time to Brace?

Stellar's XLM is teetering on the edge—and traders are fleeing. Open interest plunges as the coin flirts with a wedge breakdown, signaling potential carnage ahead. Here's what you need to know.

### The Bearish Setup: When Technicals Scream 'Sell'

A descending wedge—usually a bullish reversal pattern—is morphing into a nightmare for XLM holders. With open interest drying up, the smart money's already hedging. No fireworks, just cold, hard derivatives data.

### Liquidity Exodus: Why Traders Are Ghosting XLM

Futures markets don't lie. The open interest nosedive suggests institutional players are rotating elsewhere—probably into whatever meme coin Wall Street bots are pumping this week. Classic crypto.

### The Silver Lining? Don't Hold Your Breath

Sure, Stellar's got real-world use cases. But in a market where 'fundamentals' mean Elon's latest tweet, XLM's price action might just hinge on whether traders remember it exists. Buckle up.

Validators to vote on Stellar’s Protocol 23 upgrade 

The Protocol 23 upgrade for Stellar aims to enhance smart contract functionality with faster and cheaper transactions, thereby attracting institutional players. PayPal’s long-awaited PYUSD, a stablecoin pegged to the US Dollar, could be launched on the Stellar network after the upgrade. 

The upgrade was officially launched on the Stellar testnet on July 17 and is scheduled for a vote by the validators on August 26. If approved, the Mainnet voting will be conducted on September 3. Sidelined investors may witness the new protocol upgrade HYPE driving the buying pressure. 

Declining traders’ confidence wipes out over $200 million from XLM Open Interest 

The broader cryptocurrency market pullback sputtered the interest in Stellar since its annual high of $0.5206 on July 18. CoinGlass’ data shows the XLM Open Interest (OI) at $351.13 million, down from the $588.33 million peak on July 18. This massive capital outflow of $237 million over the last two weeks indicates a sharp decline in the value of open futures and options contracts, suggesting lowered confidence among traders. 

XLM Open Interest. Source: Coinglass

XLM risks wedge breakdown, targets $0.30

XLM is testing the 200-period Exponential Moving Average (EMA) at $0.3862 on the 4-hour chart, underpinned by the declining Relative Strength Index (RSI) at 31 on the same time frame, signaling a surge in selling pressure. 

The Moving Average Convergence Divergence (MACD) indicator on this chart, characterized by the successive growth of red histogram bars, indicates increased bearish momentum. 

It is worth noting that the price action on the 4-hour chart has formed a wedge pattern by two converging trendlines (the resistance trendline is formed by connecting July 18 and July 27 peaks, while the support trendline is extrapolated over July 15 and July 24 lows). 

If XLM closes decisively below the 200-period EMA at $0.3862, it could test a support trendline at $0.3732. Below the trendline, a potential breakdown trend could test the S2 pivot level at $0.3533, followed by the S3 pivot level at $0.3056. 

XLM/USDT daily price chart.

Looking up, a potential bounce back from the 200-period EMA could extend the reversal run to the 100-period EMA at $0.4187.