Hyperliquid Faces a Dip Despite $4.2 Million Whale Investment

Hyperliquid Faces a Dip Despite $4.2 Million Whale Investment – Will HYPE Bounce Back?

Whale activity has surged, with two major wallets investing more than $4.2 million in Hyperliquid [HYPE]. However, despite this significant accumulation, the market remains in a bearish trend, and retail traders are responding with caution. As the price continues to decline within a defined channel, the ability of whale buying to counteract the prevailing negative sentiment is being closely examined.

Key Takeaways

Whale Activity: Two wallets have invested $4.2 million in HYPE, showcasing confidence.
Price Trends: HYPE struggles within a descending channel with consistent lower highs and lows.
Market Sentiment: Retail traders are cautious as technical indicators signal weakness.
Open Interest Decline: Open Interest fell 4.44%, indicating reduced trading activity.
Long Liquidations: Long liquidations have risen significantly, signaling a shift in trader expectations.

HYPE price dips inside a channel despite whale accumulation — What happens next?

HYPE's Ongoing Downward Trend Amid Whale Accumulation

HYPE continues to move downwards within a clearly defined descending channel, where charts indicate persistent lower highs and lower lows, as selling pressures dominate the market. The $35.48 resistance level presents a significant hurdle above the current price, contributing to the ongoing struggle to gain momentum against this barrier.

At the same time, the Moving Average Convergence Divergence (MACD) indicator remains bearish, with its line situated below the signal line, suggesting weak momentum. The Relative Strength Index (RSI) at 34 further confirms selling strength, pointing to insufficient buyer engagement around support. However, the price is approaching a psychological zone where rebounds have often occurred in the past.

HYPE price action
Source: TradingView

Decline in Open Interest as Traders Withdraw

Currently, Open Interest (OI) has decreased by 4.44%, settling at $1.47 billion. This decline indicates that traders are reducing their participation amidst the latest price downturn. Such a drop reflects a cautious approach since traders tend to lower leverage during uncertain times.

Additionally, the reduced OI corresponds with lower confidence in the derivatives market, which aligns with the weak MACD and RSI indicators. However, some traders believe that this decrease in leverage could create a setup for future volatility since a thinner market often amplifies price movements. Thus, the market is bracing for swings if Hyperliquid makes a trend reaction or if bearish trends continue.

Source: CoinGlass

Short Positions Maintain Dominance

The Long/Short Ratio indicates a slight bearish dominance, with shorts at 52.24% and longs at 47.76% as of this writing. This shift implies that traders anticipate ongoing pressure despite whale purchases. Stability in this ratio over several four-hour periods strengthens the argument for cautiousness instead of impulsive trading.

However, the narrow gap between short and long positions shows no overwhelming agreement about future direction, meaning even a slight change in sentiment could reverse the balance quickly. This dynamic emphasizes the need for traders to observe whether whale moves can influence the ratio by encouraging more long positions. Therefore, the short-term outlook hinges on whether HYPE stabilizes near the channel's edge.

Source: CoinGlass

Increased Long Liquidations Amid Growing Downward Pressure

Long liquidations have sharply increased during recent downturns, with a notable $4.49 million in long positions being wiped out while losses for shorts remained minimal at $16.3k. This data reveals that downward volatility is prompting traders to reassess their expectations and liquidate premature long positions.

The spikes in liquidation correlate with the decrease in Open Interest, suggesting that traders are managing risk as bearish momentum intensifies. Furthermore, liquidation clusters frequently represent potential exhaustion points. Once forced selling subsides, the market may have the opportunity to recover. Traders will continue to monitor upcoming levels to gauge if new volatility may arise.

Source: CoinGlass

In conclusion, HYPE encounters substantial downward pressure, despite the confidence signaled by whale accumulation. Technical indicators suggest weakness until buyers can establish a stable reaction near support levels. While whale activity may signify long-term potential, data from the derivatives market reflects a more cautious sentiment coupled with increasing liquidation pressures.

Final Thoughts

The current landscape for HYPE indicates a complex interplay between whale activity and the overall market sentiment, emphasizing a need for careful observation from traders.