LAB unlocks 1.87mln tokens daily until 2028 – Can demand keep up?
Here's why LAB's rally is not likely to be sustained.
LAB [LAB] rose over 47% in 24 hours as Trading Volume increased 60%. Meanwhile, its 65% Volume-to-Market-Cap Ratio showed unusually high market turnover.
As such, this extreme liquidity could result even in large capital inflows that may not impact the prices significantly. Hence, the technical outlook was bullish in the short term, but the indicators pointed otherwise.
LAB price breaks out of a triangle pattern – Details
The hourly chart showed LAB broke out from a descending triangle pattern and surged to a daily peak of $0.2026. The breakout indicated that the altcoin may be bottoming after the 99% crash.
However, to confirm this move as a bottom, LAB needs to close above the triangle’s top at $0.33-$0.36. Flipping it would give room for LAB to fill the wick’s top at $0.4576.
The Open Interest (OI) and Cumulative Volume Delta (CVD) were rising slightly. OI reached $129 million.
However, it was in the midst of sharper downtrends for the CVD from -14.411 million to -168.963 million. This indicates massive selling pressure over the past two weeks.
Even OI-Weighted Funding Rates were green, indicating bulls were paying a premium to keep their long positions open. This evidence explains that the breakout from the short-term price pattern was driven by derivative traders.
In fact, the liquidation heatmap showed that orders with 20x leverage were the dominant trades. In total, cumulative long liquidation leverage reached $2.43 million, while shorts amounted to $1.53 million.
As such, it indicated that leveraged longs contributed to pushing the price higher. But traders were skeptical of the move, saying LAB was starting to sound like an exit market. Its upside rallies were barely sustainable.
But why?
Why may LAB’s rally not be sustainable?
Aside from the questioning of the LAB’s legitimacy, there was relentless selling pressure from the daily token unlocks. As per CoinMarketCap, 1.87 million LAB worth over $355K were getting unlocked daily.
This situation explains why the LAB price was losing its acquired gains so easily. Unless there is fresh demand to absorb the daily supply, it’s challenging for the altcoin to sustain any meaningful rally.
Otherwise, a broader crypto market recovery would help the token. However, the most significant improvement would come if the LAB team could restore the token’s legitimacy among the crypto community.
Final Summary
- LAB surged 47% in a day amid a technical pattern breakout, with leveraged long orders outweighing shorts.
- LAB price faced inherent selling pressure from 1.87M daily token unlocks until 2028, making it difficult to sustain the rally.
