Here’s Why HBAR Crypto Price May Crash Despite the Hedera ETF Launch

HBAR crypto has entered a bull run after surging by over 145% from its lowest point this month. HBAR has jumped in the past six consecutive days and is hovering near its highest level since October 11. This article examines some reasons why the HBAR ETF may crash soon, despite its recent launch.

HBAR Crypto Price May Crash as Investors Sell the News

One reason why the Hedera price has jumped in the past few weeks is the expectation that the Securities and Exchange Commission (SEC) would approve the Canary HBAR ETF.

The ETF began trading on Tuesday, making the Hedera token available to institutional investors at a time when demand for cryptocurrencies is in a strong upward trend. For example, all spot Bitcoin ETFs have accumulated over $64 billion, while Ethereum funds are nearing their $15 billion mark.

Data shows that the spot HBAR ETF had a trading volume of $8 million on the first day, much lower than Solana‘s $56 million. It was much higher than Litecoin‘s $1 million.

The HBAR ETF approval is a positive development for the token, as it is expected to boost its demand in the coming months. However, there is a risk that the price will reverse and erase some of the ongoing gains as investors sell the news.

The “buy the rumor, sell the news” strategy is a situation where investors buy an asset before a major announcement and then sell it when the news is released. This happens because this momentum tends to fade over time.

Potential Weak HBAR ETF Inflows

Another top reason why the HBAR price may retreat after the ETF approval is that the ETF may experience weak inflows in the coming months.

That’s because Hedera is not a highly actively traded coin by investors like Bitcoin, XRP, Solana, and Ethereum.

For example, data shows that Hedera’s 24-hour volume exceeded $564 million, which is a relatively small amount for a coin with a market capitalization of over $9.4 billion. The same applies in the futures market, where its open interest has remained under pressure.

Recent data shows that some crypto ETFs are not attracting inflows equally. For example, the recently launched REX-Osprey Dogecoin ETF (DOJE) has attracted only $32 million in assets, while the REX-Osprey XRP ETF (XXRP) has crossed $110 million in assets. The two funds were launched simultaneously.

Hedera Ecosystem Challenges may Hurt its Price

Meanwhile, the HBAR cryptocurrency price may struggle due to its ecosystem challenges.

Hedera, which operates a layer-1 network that is faster than Ethereum, has struggled to gain market share in the decentralized finance (DeFi) and other industries.

For example, data compiled by DeFi Llama shows that Hedera Hashgraph has a total value locked (TVL) of over $198 million, a relatively small amount compared to the industry’s total assets of over $280 billion. Hedera has only 23 protocols in its DeFi ecosystem, which is also significantly lower than other networks.

Hbar has a small market share in the decentralized exchange (DEX) industry, where its protocols handled just $9.94 million, which is also a relatively small amount for an industry that handles billions of dollars in volume.

Hedera has a tiny market share in the tablecoin processing industry. Its stablecoin assets are approximately $176 million, which is also relatively small considering that the stablecoin supply has increased to over $300 billion.

Hedera Price Technical Analysis Shows that the Token May Crash Soon

Meanwhile, the daily timeframe chart shows that the HBAR cryptocurrency price has rebounded over the past few days as hopes for the Hedera ETF have risen.

There is a risk that the price surge may not be sustained. For one, the token remains below the Supertrend indicator, a sign that bears are in control. Additionally, the token remains below both the 50-day and 100-day Exponential Moving Averages (EMAs).

Also, the Average Directional Index (ADX) has retreated from a high of 44 earlier this week to 37. This is a sign that the trend is losing momentum. Therefore, the token is likely to drop and retest the key support level at $0.15.