HBAR's Bull Trap and Lengthy Liquidations Postpone But Do Not Deny the Rally

Since August, the native cryptocurrency of the Hedera ecosystem, HBAR, has been trading in a consolidation zone. It just made its third attempt to

Since August, HBAR, the native cryptocurrency of the Hedera ecosystem, has been consolidating. It just made its third attempt to leave the zone, but it was a bull trap with lengthy, heavy liquidations.

Like the majority of cryptocurrencies, HBAR has been rising since November 5. This is due to the bullish market sentiment that has dominated the market thus far this month. But this latest effort first broke through short-term resistance at $0.063.

On November 12, HBAR rose as high as $0.077 in what appeared to be a bull trap. This is because the price quickly dropped by over 20%. After the price moved into overbought territory, there was a pullback.

The cryptocurrency's failed bullish attempt had all the makings of a bull trap. This calls for a closer examination of the effects of the pullback.

HBAR’s decline wipes out long positions

The recent gains by HBAR may have resulted in an increase in leveraged long positions. This is especially true considering that Bitcoin and many other major coins have been rising to all-time highs. An examination of the liquidation data serves to validate the bull trap scenario.

On November 12, HBAR's total liquidations reached a peak of $886,150, according to Coinglass. That day, the peak price of short positions that were liquidated was $539,450. These were the highest single-day liquidation figures recorded in the previous six months.

Source: Coinglass

On November 13, long liquidations reached a peak of $620,750, while short liquidations reached a peak of $54,110. As can be seen by the spike in liquidations on the day the price dropped, the liquidations may have contributed to the strong sell pressure.

Additionally, the liquidations correspond with the recently observed increase in open interest. Over the past ten days, there has been an increase in open interest in HBAR futures.

On November 13, it reached its peak at $61.11. That day, the majority of the open interest may have been in the bears' favor.

Following the most recent spike in open interest, it rose to a new 6-month high. This spike was far lower than the levels seen during the peak of HBAR demand in April. It does, however, indicate that interest in the cryptocurrency is gradually rising once more.

Delay In HBAR Doesn’t Mean Denial

HBAR's recent bull trap and lengthy liquidations may have delayed the rally. That being said, this does not imply that it will not occur.

Although the liquidations highlight a shakedown in leverage, HBAR was still substantially undervalued, particularly in contrast to its present 2024 peak. Many people may still own the crypto due to its potential for growth.

At the time of writing, HBAR was already attempting a bullish breakout from its consolidation zone. This indicated that there was still demand. The 27th largest crypto to date is currently preparing to test its monthly high of $0.126, trading at $0.1191 with a market capitalization of around $4,52 billion.

As was observed earlier in the week, the removal of leveraged positions could pave the way for a second rally attempt with a lower likelihood of a long squeeze scenario.