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$LAB recorded one of its sharpest daily declines after losing 32.45% over the past 24 hours, bringing its price down to $7.16.
Despite the aggressive sell-off, trading activity accelerated rather than weakened.
Daily trading volume climbed 45.77% to more than $660 million, showing that market participants continued entering positions throughout the decline.
Rising volume during a steep decline suggests traders had actively repositioned rather than exited the market entirely.
Such conditions often reflect heightened speculation, with buyers attempting to identify value while sellers continue defending lower levels.
As a result, participation remained elevated even after $LAB revisited prices last seen before its latest rally.
Why did leveraged traders increase exposure?
Derivatives activity also strengthened despite the sharp correction.
Open Interest [OI] increased 83.74% to $223.53 million even as $LAB extended its decline, indicating fresh leveraged positions entered the market instead of widespread position closures.
This combination typically reflected growing speculative participation as both bulls and bears expanded exposure during heightened volatility.
However, rising OI alongside falling prices usually indicates that new short positions have likely contributed to the broader decline. That shift also indicated traders expected another sizeable move rather than a prolonged consolidation phase.
Until leverage began unwinding, price swings could likely remain elevated.
However, sustained OI growth showed traders continued committing fresh capital despite the recent collapse, highlighting confidence that another directional move could soon emerge.
Could shorts trigger a rebound?
Professional traders maintained a slight bullish bias despite $LAB’s sharp correction.
Binance’s Top Trader Long/Short Ratio showed 51.33% of positions remained long, while 48.67% stayed short, indicating experienced participants had not completely abandoned bullish exposure.
Meanwhile, the continued increase in OI suggested aggressive short positions had also entered after the breakdown toward the $6.02 support zone.
Such positioning often created dense pockets of leveraged shorts near local bottoms.
If $LAB defended its current support, even a modest recovery could force short sellers to close positions rapidly, adding buying pressure through liquidations.
However, this scenario would represent a counter-trend short squeeze rather than a confirmed reversal.
Can $LAB defend support after the collapse?
$LAB attempted to stabilize above the $6.02 support after rebounding from an intraday low near $5.82.
Buyers pushed price back above support, although the recovery remained limited.
The Relative Strength Index (RSI) dropped to 41.15, reflecting easing selling pressure without entering oversold territory. That reading suggested sellers had lost some momentum, although buyers had not fully regained control.
The chart identified $11.86 as the nearest resistance, while $20.00 remained the next major recovery target if demand strengthened.
Should $LAB continue holding above $6.02, crowded short positioning could fuel a counter-trend squeeze toward higher resistance.
However, losing this support would likely expose the token to another wave of selling before a sustainable recovery develops.
Source: TradingView
Final Summary
- $LAB attracted fresh leveraged positions despite the sharp decline, keeping volatility elevated ahead.
- Crowded shorts near support could accelerate a relief rally if buyers defend current levels.