Analyzing the Decline of Hyperliquid (HYPE) – Will These Levels Prevent Another Bounce?

Hyperliquid [HYPE] has been experiencing a consistent downtrend during November and December. Although there was a temporary price increase of 24.1% at the start of December, this did not reverse the overall decline. Reports indicate that the monthly unlocking of HYPE tokens may influence future price movements, with cautious behavior from larger investors, or whales, highlighting the market's uncertainty.

Key Takeaways

HYPE has remained in a downward trend since October.
A price spike in early December did not stop the ongoing decline.
Monthly unlocks of 10 million HYPE tokens may impact selling pressure.
Current charts suggest continued bearish sentiment, with a potential price target of $24.19.
Traders should cautiously position themselves as market dynamics evolve.

Current Market Overview of HYPE

Hyperliquid 1-day Chart
Source: HYPE/USDT on TradingView

According to the 1-day chart, the bearish trend for HYPE has been firmly established. Since October, the token has continued to form lower highs and lower lows. Recently, the price dipped below the last significant low of $29.15 on December 9th, indicating further declines may follow. This level, combined with the $30.35-$35.36 range, serves as a supply zone where selling pressure will likely intensify if the price attempts to recover.

The Directional Movement Index (DMI) currently shows a strong bearish trend, while the Chaikin Money Flow (CMF) indicates significant capital outflows, dropping below -0.05.

Hyperliquid 1-hour Chart
Source: HYPE/USDT on TradingView

Using Fibonacci extension levels derived from last month’s price movement (from $50.16 to $29.15), the next target price for HYPE is projected at $24.19. The hourly chart, however, presents mixed signals—it confirms an active uptrend but suggests a shift from bullish to neutral in capital flows. Key resistance levels to watch in the short term are around $29.89 and $30.68.

What Needs to Happen for HYPE to Recover

The recent change in the bearish structure on the daily chart underscores the strength of the downtrend. For the trend to reverse, buyers would need to push the price above $36.17. This scenario seems unlikely given the prevailing market structure and ongoing capital outflows reflected in the daily analysis.

Traders' Strategy – Is It Time to Go Bearish?

As of now, the 1-hour structure suggests a bullish phase, but a shift toward bearish momentum could signal an ideal entry point for short positions. Traders might also consider selling or shorting HYPE if it retests the resistance up to $30.68. A downward movement towards the target price of $24.19 is anticipated, though it may take several days for this to materialize.

Final Thoughts

Disclaimer: The information provided is for informational purposes only and does not constitute financial, investment, trading, or any other type of advice; it reflects only the author’s opinion.