LAB recorded one of its sharpest daily declines after overleveraging and tokenomic concerns weighed on sentiment. At the time of writing, the token was trading at $9.00, down 34% in the last 24 hours, while its market cap dropped to $3.88 billion.
Despite the sell-off, trading activity accelerated, with daily volume up 121% to approximately $58.71 million; This suggests that market participation increased during the downturn. Reports highlighting upcoming token unlocks and concerns about concentrated token ownership added further pressure, leading participants to reassess LAB’s valuation.
As a result, leveraged positions were quickly closed, while increased uncertainty encouraged additional sales in both spot and derivative markets.
Leverage quickly disappeared from the LAB market
Derivatives activity during the downturn reflected a broad reduction in speculative risks rather than new risk taking.
At press time, Open Interest (OI) down 23.01% to $130.39 million; This indicates that investors closed their positions rather than adding new leverage during the decline. The contraction suggests that long positions are absorbing most of the selling pressure as the market reacts to worsening confidence.
Despite the decline in OI, trading volume remained high, reinforcing the view that the position dominated market activity. However, the lack of increased OI with heavy volume indicated that new buyers were not stepping in aggressively.
Instead, as capital exited leveraged positions, participants reduced risk due to increased uncertainty regarding the LAB’s near-term outlook.
Can LAB defend the last support zone?
LAB After a sharp rejection from the $20 resistance area, it approached the $7.65 support, allowing the sellers to remain firmly in control of the broader trend.
The price closed near $9.04 and the token settled only a short distance above this key demand level. At the time of writing, tThe MACD continued its downtrend as the MACD line remained below the signal line.
The histogram continued to expand into negative territory, confirming that downward pressure has strengthened throughout the recent decline. A decisive loss at $7.65 will expose the next major support near $4.00, where buyers have already emerged.
However, if buyers successfully defend the current zone, LAB may attempt a relief rally towards $7.65 before challenging higher resistance levels, although increased technical strength may still be required for confirmation.
Why are short sellers still in control?
Funding data continued to support the bearish derivative outlook as the OI Weighted Funding Rate remained below zero throughout the recent decline. Latest readings stood at around -0.1768%, indicating that short sellers continue to pay to maintain their positions.
Persistent negative funding reflects a continuing downward trend despite the sharp correction. Unlike temporary funding declines, this trend spanned several sessions and aligned with the decline in OI, reinforcing the broader risk aversion environment.
Although funding had not reached the extreme levels seen in early June, the derivatives market was still dominated by a downward trend. Sellers are likely to retain the upper hand until funding rebounds into positive territory.
If buyers defend the $7.65 support, the token could stabilize and attempt a recovery.
However, a confirmed break below this level would likely shift attention to the $4.00 support as bearish pressure continues.
Final Summary
- LAB trading volume increased as leverage was rapidly exited; This underlined the aggressive risk reduction in derivatives.
- The bearish backdrop and weakening technical structure kept sellers firmly in check near critical support.
