HBAR Bull Trap and Long Liquidations Delay But Do Not Deny the Rally

HBAR, the native cryptocurrency in the Hedera ecosystem has been trading within a consolidation zone since August. It just attempted its third effort

HBAR, the native cryptocurrency of the Hedera ecosystem, has been trading within a consolidation zone since early August. Its latest attempt at breaking out of this zone began on 5 November, just like most cryptocurrencies, thanks to the bullish market sentiment.

However, this recent attempt saw it push past short term resistance at the $0.063. HBAR soared as high as $0.077 on 12 November in a move that turned out to be a bull trap. This is because price quickly pulled back by more than 20%.

The pullback occurred after price dipped into overbought territory on the 4-hour chart. This recent attempt at breaking out of a lower time frame appeared to have been thwarted by the pullback. An evaluation of the pullback’s impact is warranted.

Long Positions Get Obliterated

HBAR's recent upside may have encouraged a surge in leveraged long positions, especially considering that many of the major coins including BTC are 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 with short positions on the same day peaking at $539,450. These were the highest single day liquidation figures observed in the last 6 months.

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 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 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 does suggest that the cryptocurrency is gradually experiencing renewed interest.

HBAR Delay is Not Denial

HBAR's bull trap and long liquidations may have delayed the rally, but 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 writing.

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.