buy the dip or sell the rip?

The Stellar Lumens price erased most of the gains made last week as the sell-off in cryptocurrencies accelerated. The XLM declined by more than 5% to $0.3118, which was about 26% below the highest level this week. Its total market capitalization declined to more than $7.5 billion, making it the 25th biggest cryptocurrency in the world.

Why XLM declined

The Stellar price declined on Monday mostly because of the wavering sentiment in the cryptocurrency industry. Indeed, the price of most cryptocurrencies has dropped in the past few days. For example, Bitcoin, which is the world, has tumbled by more than $6,000 in the past few days. 

Similarly, the total market capitalization of all cryptocurrencies tracked by CoinMarketCap has declined to about $2 trillion. Therefore, the decline of the XLM price is not because of any challenges within Stellar’s ecosystem. 

Indeed, data shows that the number of unique assets that exist in Stellar’s ecosystem has jumped to more than 38,260 in the past few days. At the same time, the total number of all on-chain trades in XLM has risen to more than 7.884 billion. The only worrying number is that the total newly created assets have dropped sharply, as shown below.

The Stellar price momentum has faded substantially in the past few weeks because of the silence regarding MoneyGram. 

In July, the XLM price jumped sharply after respected media platforms hinted that the Stellar Foundation was in talks to acquire MoneyGram, one of the biggest cross-border payment companies in the world. The entities involved like MoneyGram and Stellar Foundation did not confirm or deny the reports. Therefore, interest in cryptocurrency has dropped as investors wait for additional reports. 

Stellar price forecast

The daily chart shows that the Stellar Lumens price declined to a low of $0.1937 in July. It then rebounded as part of the overall cryptocurrency rally and after the MoneyGram rumours emerged. Along the way, the coin formed an inverted head and shoulders pattern, which is a bullish sign. It moved slightly below the neckline of this pattern at $0.4484 during the weekend and then turned lower. This price was also along the 50% Fibonacci retracement level.

Therefore, despite the current weakness, there is a likelihood that the XLM price will bounce back later this week. This view will be confirmed if it manages to move above the key resistance at $0.400.