Hyperliquid (HYPE) Price Dips Amidst Broader Crypto Market Downturn
Hyperliquid (HYPE), a Layer 1 high-performance blockchain protocol, is experiencing a downturn on Friday, influenced by bearish market sentiment across the cryptocurrency landscape. After a bullish July that propelled HYPE by 35% to its all-time high of $49.85, the token has retraced some of those gains, trading at $39.48 at the time of writing.
HYPE Falls Below $40.00 as DeFi TVL Wavering
Hyperliquid’s Decentralized Finance (DeFi) ecosystem saw tremendous growth in the second quarter, a trend that continued into the third quarter, pushing the Total Value Locked (TVL) to a record high of $2.14 billion.
TVL represents the sum of the value of all coins held in smart contracts across all protocols on the chain. Such a consistent increase in TVL underscores investor confidence in the ecosystem, as holders anticipate HYPE’s price to continue its upward trajectory. Smart contracts enable token holders to participate in network security while earning annual rewards.
As TVL increases, the circulating supply of the token decreases, which in turn reduces potential selling pressure. However, with HYPE’s TVL slightly wavering from its all-time high of $2.05 billion on Friday, it could signal an unstable recovery in the coming sessions.
This reversal in TVL coincides with a slight dip in Futures Open Interest (OI), averaging $1.86 billion after peaking at $2.19 billion on July 15. If this decline persists, it would indicate a lack of conviction in HYPE’s ability to sustain its recovery, as fewer traders are leveraging long positions.
Technical Outlook: Hyperliquid Remains Below $40.00
Hyperliquid’s price remains pressured below the $40.00 threshold, reflecting risk-averse sentiment and low speculative demand. The daily chart highlights key bearish signals, including a downward-trending Relative Strength Index (RSI) currently below the midline at 39.
A sell signal maintained by the Moving Average Convergence Divergence (MACD) indicator since Sunday urges investors to consider reducing their exposure. Red histogram bars below the midline imply dominant bearish momentum. Should this outlook persist, the decline could accelerate towards the 50-day Exponential Moving Average (EMA), currently at $36.07.
Still, traders should temper their bearish expectations to manage risk, especially if bulls attempt to reclaim support above $40.00. While such a move does not guarantee a major trend reversal, it could encourage risk-on sentiment, allowing traders to increase their exposure as they shift their focus towards the all-time high just below $50.00.
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