Hyperliquid (HYPE) Attempts Recovery After Recent Dip
Hyperliquid’s token, HYPE, is showing signs of a potential rebound, climbing nearly 3% on Friday to trade around $36.82. This comes after a three-day losing streak. The Layer-1 blockchain token is trying to reverse a recent downtrend, following a 23% drop from its all-time high of $45.71, reached on June 16th. Support found at $35.34 has seemingly paved the way for a push towards the critical resistance level of $40.00, and potentially a retest of the all-time high.
Growing DeFi TVL Suggests Investor Confidence
Interest in Hyperliquid has been steadily increasing over the past three months, fueled by HYPE’s price recovery. According to DeFiLlama, the Total Value Locked (TVL) in Decentralized Finance (DeFi) protocols on the chain stood at approximately $1.77 billion on Friday.
The upward trend since April 1st has resulted in an impressive 80% surge in TVL, from around $353 million. This indicates growing user confidence in the token and the Hyperliquid ecosystem, as evidenced by increased deposits and staking activity.
A higher TVL figure reflects adequate liquidity within the protocol’s DeFi platforms, encompassing lending, borrowing, and trading activities. Overall, Hyperliquid benefits from positive sentiment, supported by token holders and platform adoption.
Furthermore, a larger TVL can make HYPE less susceptible to price drops during sell-offs, as users lock their holdings in smart contracts.
Open Interest Declines, Signaling Caution
However, investors should temper their expectations, considering the downward trend in Open Interest (OI) for HYPE futures contracts. Data from CoinGlass reveals that the OI averaged $1.66 billion on Friday, after peaking at approximately $1.98 billion on June 17th.
Open Interest represents the total USD value of all outstanding futures and options contracts that have yet to be settled or closed. A sustained decline suggests that traders are losing interest in HYPE and are less likely to be betting on short-term price increases.
If trading volume declines in tandem with OI, market activity will slow down, potentially limiting upward momentum and leaving Hyperliquid vulnerable to a price correction.
Technical Outlook: Recovery Attempt Faces Headwinds
Hyperliquid’s price is currently forming a green candlestick on Friday, after finding technical support around $35.34. A breakout towards the key $40.00 level is likely if buyers can overcome a confluence of resistance around $37.14. This area is where the 100-period and 50-period Exponential Moving Averages (EMAs) converge with the upper boundary of a descending channel on the 4-hour chart.
The Relative Strength Index (RSI) is positioned slightly above the midline, indicating mild bullish momentum. Traders should monitor the market for continued movement into overbought territory to assess the strength of the upward trend.
However, the Moving Average Convergence Divergence (MACD) indicator maintains a sell signal that emerged on Thursday, which could dampen bullish enthusiasm.
Understanding Cryptocurrency Metrics
Here’s a breakdown of some key cryptocurrency metrics mentioned in the article:
- Circulating Supply: The total number of cryptocurrency tokens that are publicly available and in circulation.
- Market Capitalization: Calculated by multiplying the circulating supply of a cryptocurrency by its current market price.
- Trading Volume: The total number of tokens of a specific asset that have been traded between buyers and sellers within a set trading timeframe, such as 24 hours.
- Funding Rate: A mechanism used by exchanges to ensure that the prices of perpetual contracts converge with spot market prices.
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