Hyperliquid Faces Challenges as HYPE Token Nears Record Low
Hyperliquid, the popular perpetual decentralized exchange, is under intense pressure as its token nears a record low and its network volume plunges.
Hyperliquid’s native token, HYPE, has experienced a significant decline, dropping to a low of $11.10. This represents a 67% decrease from its all-time high of $35.20, leading to a market cap reduction from nearly $10 billion to $3.8 billion.
The sharp decline in the HYPE token’s value can be attributed to several factors, including substantial dilution risks. With a total supply of close to 1 billion tokens and 333 million currently in circulation, the upcoming token unlocks starting in November pose a risk of higher inflation and dilution for existing token holders.
Following the JELLY crisis, where the token was delisted abruptly by developers, Hyperliquid has faced challenges that have contributed to lower network activity. This crisis has resulted in decreased trading volume within the network, with perpetual futures volume dropping to $175 billion in March, marking the second consecutive month of decline from the peak of nearly $200 billion in January.
Moreover, Hyperliquid’s seven-day volumes have decreased by over 27% to $38 billion, while daily volume has fallen by 70% to $2.4 billion. The layer-1 network volume has also experienced a decline of 28.5% to $702 million.
Technical Analysis of HYPE Price
Looking at the 4-hour chart, the Hyperliquid price has plummeted from $35.12 to $11.6, breaching the crucial support level at $12.11. This breakdown invalidated the formation of a double-bottom pattern and indicated a bearish trend.
A bearish flag pattern has emerged on the chart, characterized by a vertical line and a rectangular consolidation, signaling a potential further downside movement. The token has also moved below the 50-period moving average, suggesting a continuation of the bearish momentum towards the all-time low of $10.45.
To reverse the bearish outlook, HYPE price would need to surpass the resistance at $13.37. Otherwise, the token is likely to face further downward pressure in the near term.