HBAR Bulls Slapped Back Into Consolidation Zone

HBAR, the native cryptocurrency in the Hedera ecosystem has been trading within a consolidation zone since August. It just attempted its third effort at exiting the zone but it turned out to be a bull trap characterized by heavy long liquidations.

HBAR has been rallying since 5 November, just as was the case with most cryptocurrencies. This was courtesy of the bullish market sentiment that has prevailed so far this month. However, this recent attempt initially pushed past short term resistance at the $0.063.

HBAR soared as high as $0.077 on 12 November in a move that appeared to have been a bull trap. This is because price quickly pulled back by more than 20%. The pullback occurred after price dipped into overbought territory.

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The cryptocurrency’s thwarted bullish attempt has all the makings of a bull trap. This warrants an evaluation of the pullback’s impact.

Long Positions Get Obliterated

HBAR’s latest upside may have encouraged a surge in leveraged long positions. This is especially considering that many of the major coins including Bitcoin have been rallying to new highs. A look at liquidation data confirmed the bull trap scenario.

According to Coinglass, HBAR’s total liquidations on 12 November peaked at $886,150. Short positions on the same day peaked at $539,450. These were the highest single day liquidation figures observed in the last 6 months.

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Long liquidations also peaked at $620,750 on 13 November against $54,110 in short liquidations. The surge in liquidations on the same day that price pulled back confirmed that liquidations may have played a role in the robust sell pressure.

The liquidations were also in line with the recently observed surge in open interest. HBAR futures open interest was on the rise in the last 10 days.

It peaked at $61.11 on 13 November. It is possible that most of the open interest observed on that day was in favor of the bears.

The latest surge in open interest saw it rally to a new 6-month high. This surge was nowhere near the levels observed at the height of HBAR demand in April. However, it suggests that the cryptocurrency is gradually experiencing renewed interest.

HBAR Delay is Not Denial

HBAR’s latest bull trap and long liquidations may have delayed the rally. However, this does not necessarily mean that it will not happen.

The liquidations underscore a leverage shakedown but HBAR was still significantly undervalued. Especially compared to its current 2024 high. Many might still hold the cryptocurrency because of its potential upside.

HBAR was already in the process of another bullish breakout attempt from its consolidation zone at the time of observation. This was a sign that demand was still active.

The elimination of leveraged position may set the stage for another rally attempt with lower risk of a long squeeze scenario as observed earlier in the week.