HBAR has struggled to break free from a two-month downtrend, with its price stuck under the $0.20 resistance level. Although the altcoin is attempting to bounce back, broader market conditions and a lack of investor confidence have hindered its efforts. 

This ongoing struggle to regain upward momentum keeps HBAR in a difficult position, as it faces resistance both in price action and investor sentiment.

Hedera Investors Are Bearish

The Chaikin Money Flow (CMF) indicator has shown weak inflows since the beginning of the year. Over the past two months, HBAR’s inflows have been overtaken by outflows, a trend that has caused the CMF to remain below the zero line. This lack of strong buying interest reflects investor hesitancy, making it difficult for the altcoin to gain sustained bullish momentum.

With the CMF struggling to cross back above zero, HBAR’s market sentiment continues to be weak. This pattern indicates a lack of confidence from investors, as they are not actively driving up demand for HBAR. 

In terms of macro momentum, the Moving Average Convergence Divergence (MACD) has been showing mixed signals. Over the past three weeks, HBAR’s momentum has shifted from bullish to bearish, and now, it is back to bullish again. While this may seem like a positive sign, the lack of consistent momentum makes it unlikely that the uptrend will be sustainable.

The MACD’s fluctuations indicate that HBAR is struggling to maintain a steady trend, leaving its price vulnerable to sudden volatility. If the altcoin cannot establish a firm bullish trend, it may face further challenges in regaining investor confidence and stabilizing its price action.

HBAR Price Needs A Push

Currently trading at $0.197, HBAR is attempting to hold this level as support. However, it has been stuck under $0.200 for the past two weeks, unable to make significant gains. The price will need to consistently hold above $0.197 for a longer period to signal a potential recovery.

If the bearish momentum continues, HBAR may fail to breach $0.197 and instead fall to $0.177. A loss of this support level would open the door for a deeper decline, potentially bringing the price down to $0.154. This scenario would further extend the altcoin’s downtrend and delay any potential recovery.

On the other hand, if HBAR can break through the $0.197 resistance, it could pave the way for a rise to $0.222. Successfully securing this level would mark the end of the current downtrend and initiate a recovery, helping HBAR regain recent losses.

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Celo has officially transitioned from a standalone EVM-compatible Layer-1 (L1) blockchain to an Ethereum Layer-2 (L2), marking a significant milestone for the blockchain ecosystem.

The network first proposed the migration two years ago, intending to enhance security, real-world Ethereum use cases, and developer experience.

Celo’s Migration to Ethereum Layer 2

Celo finalized its migration to an Ethereum Layer-2 network on Wednesday, utilizing Optimism’s OP Stack and EigenDA for data availability.

The upgrade, which was completed at block height 31,056,500, strengthens Celo’s security. It enhances interoperability with Ethereum and maintains its hallmark features, such as low transaction fees and fast processing times.

The official Celo countdown website confirmed the transition, announcing that Celo is now live as an Ethereum Layer 2. The move follows 20 months of planning, testing, and governance discussions since its initial proposal by cLabs in July 2023.

“The Celo L2 migration has been successfully completed. Celo is now live as an Ethereum Layer 2,” read the announcement.

The migration process began with Celo validators intentionally halting block production on its L1 network. cLabs, the protocol development for Celo, officially announced the start of the hard fork on X (Twitter).

It stated that the Celo L2 Hardfork had begun. Validators had intentionally halted Celo L1 block production as the protocol transitioned to an Ethereum Layer 2. Less than two hours later, block production resumed on Celo L2, with public RPC (Forno) and indexers coming online shortly after.

Implications for Users and Developers

The shift to Ethereum Layer-2 brings significant advantages. Leveraging Ethereum’s infrastructure improves security and network strength. Blocks production happens in one second instead of five, significantly increasing transaction speeds.

Celo retains its ultra-low transaction fees of $0.0005, ensuring cost-effective transactions. Native Ethereum bridging reduces reliance on external bridging solutions, which have historically been vulnerable to exploits.

With this transition, Ethereum developers can seamlessly build on Celo with minimal adjustments, improving developer compatibility. Marek Olszewski, CEO and co-founder of cLabs, called the migration an exciting return home for Celo, combining the best of both networks to scale Web3 with global reach.

Following the announcement, CELO’s price jumped nearly four percent, reflecting market optimism about the move.

However, this transition comes at an intriguing time for Layer 2 networks. Solana (SOL) co-founder Anatoly Yakovenko recently questioned the necessity of Layer 2 solutions, stating that Solana’s monolithic Layer 1 architecture is sufficient.

Additionally, Binance founder Changpeng Zhao recently reignited the debate on whether AI projects should be built on Layer 1 or Layer 2 networks. This highlights the ongoing discussions about the best blockchain scaling approaches.

Meanwhile, Ethereum has seen a 95% drop in transaction fee revenue amid the shifting Layer 2 playing field. Users increasingly adopt these solutions for lower costs and improved efficiency.

As Celo fully integrates into the Ethereum ecosystem, users and developers can expect increased liquidity, seamless transactions, and enhanced security features.

“Celo has done a lot for crypto’s global adoption, and I am excited to see Celo fully embracing the Ethereum family,” Ethereum co-founder Vitalik Buterin commented.

However, the network must also brace for potential diversion of transaction fee revenue away from Ethereum’s main chain.

Celo’s ultra-low fees are attractive, but ensuring long-term network security and incentives for validators remains a challenge. It may need to explore alternative revenue streams, such as MEV (Maximal Extractable Value) capture or strategic partnerships. 

Despite the backlash against L2 networks, Joanna Zeng, co-founder and CEO of SOON, an SVM rollup on Ethereum, advocates for L2s.

“L1s will not change their base layers, but they can still benefit from better scalability. Instead of arguing against L2s, the real opportunity is proving the strength of SVM by expanding beyond Solana,” Zeng told BeInCrypto.