A prominent Made In USA cryptocurrency is experiencing heightened downside risk despite a notable increase in network activity. Hedera’s native token, $HBAR, has plummeted about 11% year-to-date and a staggering 58% over the past year. This slip is compounded by the formation of a bearish head-and-shoulders pattern on the charts, which is often indicative of a trend reversal, occurring just as the capital locked within its network surged nearly 50%.
Recent technical analysis revealed that $HBAR fell below the neckline of the head-and-shoulders pattern on March 7, exposing the asset to further downward movement. This unexpected price weakness coincides with significantly improved network metrics for Hedera, raising questions among investors and analysts about the disconnect between fundamentals and market performance.
According to data from DeFiLlama, the Total Value Locked (TVL) on the Hedera network has increased from approximately $38.6 million on February 16 to around $60.4 million at the current time. This represents a more than 50% increase in just a few weeks for the platform, usually a positive sign suggesting growing developer engagement and investor confidence.
Despite the favorable fundamentals indicated by the rising TVL, $HBAR appears to be weakening technically. This divergence suggests that market sentiment is currently overshadowing the underlying positive trends, a common occurrence during bearish market phases.
Nevertheless, retail interest in $HBAR remains strong, as many traders are trying to capitalize on what they perceive as a dip opportunity. One indicator of this behavior is the Money Flow Index (MFI), which measures buying and selling pressure by combining price movements with trading volume. The MFI showed a rising trend between February 5 and March 7, indicating consistent dip-buying activity among traders.
Further signaling retail accumulation, exchange flow data has indicated continuous outflows of $HBAR from exchanges since March 5, even amid price declines. The most recent data identified approximately $526,770 worth of $HBAR leaving exchanges, suggesting that traders are undeterred by the current sell-off.
However, while retail buying can have an impact, it doesn’t guarantee stability in the market without larger institutional capital backing it. The Chaikin Money Flow (CMF) indicator, which assesses capital movement based on price and volume, recently fell below the zero line. This indicates that capital outflow has begun to overshadow retail inflow. Additionally, the CMF crashed below an ascending trendline that had previously supported Hedera’s price, signifying a potential withdrawal of institutional interest.
This scenario creates a precarious market environment. Although retail investors are actively trying to buy the dip, the overall capital flow dynamics appear to be weakening. Following the head-and-shoulders breakdown, the token’s price structure suggests a potential drop to around $0.079, translating to an 18% downside from the neckline. Should the token fail to reclaim the pivotal $0.095 mark, the bearish structure will remain intact, with support levels around $0.091 and $0.082, while the head-and-shoulders target lurks at $0.079.
For the price to shift toward a bullish outlook, $HBAR would need to regain the $0.101 level, a threshold that has consistently repelled upward movement since late February. A more robust recovery might require breaking above $0.106, while invalidation of the bearish pattern would necessitate a price rise above $0.107. Until these levels are achieved, the current trend suggests ongoing challenges for $HBAR amidst improving network fundamentals.
