Hedera has shown a short-term recovery after hitting a local low on December 19. Since then, the HBAR price has risen by about 11% from the time of writing. But this increase does not change the broader picture. HBAR is still nearly 50% lower over the last three months and remains weak over the past seven days.
The problem is not just the price. A greater concern is the behavior of capital. While the price briefly rose, data beneath the surface shows more stress. Unless unexpected support comes, this movement could turn into a bull trap.
Capital flow weakens while the risk of breakout increases.
The first warning comes from the capital flow.
The Chaikin Money Flow, or CMF, looks at whether large money from wallets is flowing into or out of an asset, using price and volume. When the CMF declines, it indicates that capital is slowly flowing out, even if the price remains stable.
On the daily chart, HBAR’s CMF is declining and hitting a descending trendline that has indicated capital outflow for weeks. This trendline connects lower lows in the CMF, not in the price, making it extra risky. It shows that large players are holding less and less position.
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If the CMF drops below this trendline, it confirms the transition from weak inflow to active outflow. This aligns with the broader picture, where the HBAR price is still trading within a descending channel. In that case, the recent 11% increase is unlikely to persist.
Shorts and Bitcoin are the only possible lifeline.
However, there is one possible counterforce.
Derivatives data show a strong short preference. On Bitget, the total short liquidation leverage is around $9.9 million, compared to about $6 million in long liquidations. This means that at the current level, there are about 50% more shorts than longs.
This is only significant if the price receives support from elsewhere.
That support could come from Bitcoin. Over the past seven days, HBAR’s correlation with Bitcoin has been around 0.85. Correlation indicates how strongly two assets move together, with 1 meaning they move almost exactly the same.
If Bitcoin continues to rise, the HBAR price could be pulled up as well. This could force shorts to close their positions, causing a short squeeze instead of organic demand. Without the strength of Bitcoin, the surplus of shorts is not enough.
HBAR price levels to watch.
The HBAR price is now close to the lower trendline of the descending channel.
If HBAR loses the $0.10 level, the structure breaks further down and existing long liquidations could accelerate. This would confirm the CMF signal and extend the downward trend.
To survive an increase, HBAR needs support from Bitcoin and a push towards $0.13. That level corresponds to the upper part of the recent range and could cause a wave of short liquidations in the coming 30 days.
Until then, the risk remains primarily downward.
The 11% recovery of Hedera seems more like a dead cat bounce. A dead cat bounce is a brief recovery that quickly fades within a broader downward trend.
The capital flow weakens, the structure remains bearish, and only a Bitcoin-driven short squeeze can prevent a stronger decline. Without that trigger, the trend remains under pressure.
