Derivatives data shows that the current open interest is $89.20 million, and the funding rate is positive (0.00500%). This indicates that despite the price being in a consolidation phase after a long-term downtrend, bullish sentiment in the derivatives market is slightly prevailing, with bullish traders willing to pay fees to maintain their positions. High open interest combined with sideways consolidation typically signals an impending significant volatility as the market accumulates orders.
From the perspective of institutional order flow analysis, the price entered a narrow consolidation range after hitting a low of $22.185. The Bollinger Bands have narrowed sharply, confirming that volatility is brewing. The current price action can be viewed as a stage of accumulation following a large decline.
"Smart money" may hunt for liquidity in two key areas: below at the recent low of $22.185 and above at the top of the consolidation range around $25.20. Considering the positive funding rate and the need for the market to correct after a long decline, a typical institutional maneuver is to first execute a "fakeout" to the downside, sweeping out the bullish stop-loss orders established at the bottom of the consolidation range. After accumulating sufficient liquidity, a rapid upward movement may follow.
Therefore, any downward breakout at this current stage is more likely to be a fakeout intended to initiate a new upward trend rather than a continuation of a genuine downward trend. The true trend direction may be upward, with the goal of clearing the liquidity above the consolidation range.
Based on this analysis, our strategy is to wait for the price to break down to hunt for liquidity and enter long positions after it quickly recovers to the support level.
Institutional Setup:
Entry Zone: $23.00 (Enter after the price breaks below $22.185 and quickly recovers to this zone)
Target 1: $25.20 (Liquidity target - top of the consolidation range)
Target 2: $26.50 (Trend target - EMA99 resistance level)
Stop Loss: $21.80 (Set below the liquidity low that was swept)
$HYPE
