HBAR's Bear Market Risks and the Unusual Signs of a Potential Short Squeeze

The cryptocurrency market in 2025 remains a theater of extremes, where technical indicators and sentiment analysis often diverge, creating opportunities for contrarian investors. Hedera (HBAR), the native token of the hashgraph-based Hedera network, sits at a critical juncture. While bearish pressures loom large, subtle signs of a potential short squeeze are emerging, driven by a mix of derivatives market dynamics, social media sentiment, and institutional interest. This analysis unpacks the risks and opportunities, drawing on recent data to navigate the volatility.

Bear Market Risks: A Technical and Derivatives Perspective

HBAR's price action in late 2025 reflects a fragile equilibrium. Technical indicators such as the Relative Strength Index (RSI) and Elder-Ray Index suggest weakening momentum, with the token trading near critical support levels at $0.12 and $0.10. A breakdown below these levels could trigger a cascade of liquidations, pushing the price toward $0.18 or even $0.067. The Moving Average Convergence Divergence (MACD) has also flashed a bearish crossover, signaling a potential continuation of downward trends.

Derivatives markets amplify these risks. The long/short ratio for HBAR has plummeted to 0.86, its lowest in a month, indicating a sharp rise in bearish sentiment. Short positions now outnumber longs, with negative Chaikin Money Flow (CMF) readings of -0.10 reinforcing the selling pressure. Open interest data further underscores the precariousness: while spot prices may appear stable, the derivatives market is bracing for further declines.

Contrarian Signals: Short Squeeze Potential and Oversold Conditions

Despite the bearish narrative, HBAR's recent 8.68% rebound hints at a possible reversal. Oversold conditions near $0.12-a level where short sellers often face margin calls-could catalyze a rally to $0.19. This aligns with accumulation zones identified between $0.100 and $0.067, where bulls might defend the token to prevent a deeper bearish move.

Contrarian indicators add nuance. The put-call ratio for derivatives linked to the Canary HBAR ETF (HBR) stands at 0.0938, a 90-day low that reflects overwhelming bullish bias. A put-call ratio below 0.7 typically signals strong investor confidence, suggesting that market participants are heavily positioned for upward movement. Meanwhile, the long/short ratio in spot markets has hit a 30-day high of 1.06, indicating growing retail and institutional optimism.

Social media sentiment, though volatile, plays a pivotal role. The CoinMarketCap Fear and Greed Index, which measures market extremes, suggests that periods of "extreme fear" could act as contrarian buy signals. While HBAR's social media buzz remains mixed, spikes in retail engagement often precede short-term rallies, particularly in tokens with strong enterprise adoption narratives.

Institutional Interest and Long-Term Catalysts

HBAR's fundamentals offer a counterbalance to near-term volatility. The Hedera network's unique hashgraph technology and partnerships in real-world asset (RWA) tokenization and DeFi are gaining traction. Institutional interest, particularly in enterprise applications, could drive long-term demand, even as short-term traders grapple with liquidity risks. Analysts project a bullish case of $1–$2 if the $0.06 support level holds, though this hinges on broader crypto market conditions.

Conclusion: Navigating the Divergence

HBAR's 2025 trajectory embodies the duality of crypto markets: a bearish technical setup coexists with contrarian signals pointing to a potential short squeeze. For investors, the key lies in balancing short-term risks-such as support breakdowns and derivatives-driven liquidations-with long-term catalysts like institutional adoption. While the path to $0.19 or higher remains speculative, the interplay of derivatives data, sentiment extremes, and enterprise growth makes HBAR a compelling case study in contrarian investing.