Hedera (HBAR) has shown a recent recovery with an 11% price bounce since hitting a local low on December 19. However, this upward movement may not be enough to reverse the broader bearish trend that has gripped this cryptocurrency in recent months. Despite the short-term gains, HBAR prices remain down nearly 50% over the past three months and show continued weakness.
Capital Flow Signals Persistent Challenges
One of the key indicators causing concern for investors is the Chaikin Money Flow (CMF). This metric tracks the inflow and outflow of capital into an asset by analyzing its price and volume. The data reveals a consistent lower trendline in HBAR’s CMF, suggesting that large-scale investors are reducing their exposure to the token. This behavior could signal deeper price declines in the near future.
If the CMF breaks below its descending trendline, it will validate a shift from weak inflows to active outflows. Combined with the bearish trend of HBAR’s price within a descending channel, this scenario amplifies the risk of a breakdown. The 11% bounce may be nothing more than a temporary relief, or as traders call it, a “dead cat bounce.”
The Role of Bitcoin in Hedera’s Survival
One glimmer of hope for HBAR exists in the derivatives market, which shows a significant short bias. There is currently $9.9 million in short liquidation leverage compared to $6 million in long liquidations. This imbalance presents a potential for a short squeeze, where traders betting against HBAR are forced to buy back their positions, driving prices higher. However, for this to happen, Bitcoin must lead the charge.
Over the last week, HBAR has maintained a strong correlation with Bitcoin, with a coefficient of 0.85. Should Bitcoin rally, a ripple effect might lift HBAR, prompting a short squeeze and temporarily reversing its downward momentum. Without Bitcoin’s support, however, this short imbalance is unlikely to be enough to drive significant recovery.
Key Price Levels to Watch
Currently, HBAR is testing its lower trendline within the descending channel. If prices dip below $0.10, the situation becomes more dire, potentially triggering a cascade of long liquidations and a deeper downtrend. For bulls to gain control, HBAR would need to regain the $0.13 level, a resistance point that aligns with the upper boundary of the current bearish range. This target could also act as a catalyst for short liquidations.
Until these conditions are met, HBAR’s recovery remains uncertain, and the trend is likely to stay under pressure.
Consider Tracking Market Data and Tools
Investors looking to stay informed about cryptocurrencies like Hedera should leverage reliable market data tools such as CoinMarketCap or CoinGecko. These platforms provide real-time insights on prices, capital flows, and market sentiment.
Conclusion
Hedera’s 11% rebound may seem promising, but underlying data indicates that this could be a short-term rally within a larger bearish trend. With weakening capital flows, lingering bearish structures, and heavy reliance on external factors like Bitcoin’s performance, the road ahead is steep for HBAR. Investors are encouraged to tread carefully and maintain a vigilant eye on key market indicators.
