- Stellar Lumens and Solana prices dipped sharply in the overnight session.
- The decline coincided with the stocks and bonds sell-off.
- There are concerns about the rising recession risks.
Stellar Lumens (XLM) crypto price was not left behind in the latest crypto sell-off. The coin plunged to a low of $0.1115 on Friday morning, the lowest level since July 13th. It has retreated by more than 42% from the highest level this year. Similarly, Solana price dropped to a low of $20.55, its lowest point since July.
Why XLM and SOL prices dipped
Stellar Lumens and Solana prices joined the ongoing cryptocurrency sell-off in the overnight session. As I have written before, the crypto sell-off was not an isolated event since other financial assets.
A look at the stock market shows that most indices have dropped in the past few days. The Hang Seng index dropped by more than 1% on Friday while in the United States, the Dow Jones, Nasdaq 100, and S&P 500 fell by over 0.50% on Thursday.
The bond market sell-off also gained steam, pushing bond yields to the highest level in years. For example, the 30-year bond yield rose to the highest level in over 10 years while the 10-year yield rose to 2008 highs. Mortgage rates have risen to levels last seen in 2000.
Therefore, while the American economy is doing well, there are signs that a recession will happen in the next few months. Besides, the yield curve has been inverted to the lowest level in decades.
A likely trigger for the recession is China, the second-biggest economy in the world. The economy is underperforming, pushing more analysts to downgrade their estimates. Worse, several companies are at a risk of bankruptcy. Evergrande has already filed for bankruptcy protection while Country Garden is on the verge.
Most importantly for cryptocurrencies like Stellar and Solana, Bitcoin broke the important support at $28,000, which I wrote about here. Cryptocurrencies tend to drop in sync with the performance of Bitcoin.
Solana price prediction
The 4H chart shows that SOL price formed a double-top pattern at $25.40. In price action analysis, this pattern is one of the most accurate bearish signs in the market. It then moved below the important support at $22.20, the lowest level on August 5th of this year.
Solana has dropped below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved to the oversold level. Therefore, the outlook for the coin is bearish, with the next reference level to watch will be at $20.
Stellar Lumens price forecast
The daily chart shows that the XLM price has been in a strong bearish trend in the past few months. The token dropped below the important support at $0.1324, the lowest level on August 5th. It has also dropped below the descending trendline shown in black.
Stellar Lumens has also dropped below the 50-day and 25-day moving averages while the Relative Strength Index (RSI) has moved to the oversold level. Therefore, I suspect that the coin will have a dead cat bounce and retest the resistance at $0.1325.
Read more: How to buy Stellar Lumens.
