Helium (HNT) Rally at Risk: Is a 35% Drop Imminent?
Key Takeaways
HNT has seen recent gains, but a looming supply zone could halt its progress. Increasing selling pressure and weakening momentum indicate a possible sharp reversal.
Helium (HNT) experienced a 10% surge, outperforming the crypto market. However, exchange outflows and bearish signals suggest this rally might be short-lived.
Analysis indicates that despite HNT's apparent bullishness, weakening market structure and liquidity drainage point to an expected pullback. Here's what to monitor.
HNT Faces a Critical Roadblock
Analyzing the 1-day chart reveals HNT approaching a critical supply zone between $3.90 and $4.24. This area has historically triggered significant sell-offs.
Previous tests of this range resulted in:
- February 23rd: 42% drop
- April 13th: 17% decline in three days
- May 28th: 46% drop
This pattern suggests that entering this supply zone could trigger another sharp decline, potentially between 17% and 46%, averaging around 35%.
Investors Reduce Exposure
Some investors seem to be reducing their HNT holdings in anticipation of a price correction.
Over the past four days, spot market participants sold approximately $2.17 million worth of HNT, according to CoinGlass data.
This selling trend is evident in a consistent green histogram, indicating sustained outflows. The derivatives market reflects this behavior.
Open Interest has increased by 4% to $7.34 million, showing heightened trading activity.
However, the Long-to-Short ratio favors sellers, suggesting that most of the $364,000 in added liquidity over the past 24 hours came from short positions.
Trading volume has decreased by 10% even as the price rose, which is typically a warning sign for bullish momentum. A rally without increasing volume indicates a weak move, raising the risk of a breakdown.
Bearish Indicators Signal a Pullback
Technical indicators further support the bearish outlook.
The Money Flow Index (MFI) has entered overbought territory (above 80), suggesting HNT is currently overvalued and prone to a correction.
Additionally, the Accumulation/Distribution (A/D) indicator remains negative, indicating more selling than buying activity and suggesting continued downward pressure.
If the A/D indicator remains negative, HNT could face a significant drop in the coming days.
Disclaimer: This analysis is for informational purposes only and should not be considered financial advice. Trading cryptocurrencies involves risk.