LAB (LAB) rose over 47% in 24 hours as trading volume increased by 60%. At the same time, its volume to market capitalization ratio of 65% showed unusually high market turnover.
As such, this extreme liquidity could even lead to large capital inflows that may not have a significant impact on prices. Therefore, the technical outlook was bullish in the short term, but indicators pointed otherwise.
LAB Price Breaks Out of a Triangular Pattern – Details
The hourly chart shows that LAB broke out of a descending triangle pattern and reached a daily high of $0.2026. The breakout indicated that the altcoin may have reached its lowest level after the 99% crash.
However, to confirm this move as a bottom, LAB must close above the triangle apex between $0.33 and $0.36. Flipping it would allow LAB to fill the top of the wick at $0.4576.
Open interest (OI) and cumulative volume delta (CVD) increased slightly. OI reached $129 million.
However, it occurred amid a sharper downward trend in CVD, from -14.411 million to -168.963 million. This indicates massive selling pressure over the past two weeks.
Even IO-weighted funding rates were green, indicating that bulls were paying a premium to keep their long positions open. This evidence explains that the break with the short-term price structure was caused by derivatives traders.
In fact, the liquidation heat map showed that orders with 20x leverage were the dominant trades. In total, the cumulative liquidation leverage of long positions reached $2.43 million, while that of short positions amounted to $1.53 million.
As such, it indicated that leveraged long positions helped drive the price higher. But traders were skeptical of the move, saying LAB was starting to look like an exit market. Its bullish rebounds were barely sustainable.
But why?
Why might LAB’s rally not be sustainable?
In addition to calling into question the legitimacy of the LAB, daily token unlocks have exerted relentless selling pressure. According to CoinMarketCap, 1.87 million LAB worth over $355,000 were being unlocked daily.
This situation explains why the LAB price lost its acquired gains so easily. Unless there is new demand to absorb the daily supply, it is difficult for the altcoin to sustain a meaningful rally.
Otherwise, a broader recovery in the crypto market would help the token. However, the most significant improvement would come if the LAB team could restore the legitimacy of the token within the crypto community.
Final summary
- LAB surged 47% in one day amid a technical breakout, with leveraged long orders outweighing shorts.
- LAB price has faced inherent selling pressure since the daily unlock of 1.87 million tokens through 2028, making it difficult to sustain the rally.
