Hyperliquid (HYPE) Plunges 60% From ATH: Bearish Signals Dominate

The technical picture for HYPE is decisively negative. As reported by CryptoPotato, the HYPE/USDT pair has broken below the lower boundary of its descending price channel, a trendline that had provided support for several months. Analyst Duo Nine described this price action as an “extremely bearish pattern,” with his analysis pointing to $22 as the next potential target. The breakdown is significant, with the price now sitting below the key 50% Fibonacci retracement level of $26, which has flipped from support to resistance.

Momentum indicators on the weekly chart reinforce the bearish outlook. The MACD shows a widening gap between the MACD line and its signal line, with values at -1.78 and 1.12 respectively. The histogram bars are red and increasing, indicating that downward momentum is accelerating. Meanwhile, the Relative Strength Index (RSI) sits at 37. While not yet in oversold territory, this level reflects weak buying interest and leaves room for further declines before a potential technical bounce. Traders are watching for signs of a local bottom, but no clear reversal signal has emerged.

Amid the sharp price decline, on-chain data reveals notable accumulation by large holders, or “whales.” According to Bitcoinsensus, three large buyers deposited a combined $37 million worth of USDC stablecoin into the Hyperliquid platform, placing substantial buy orders for HYPE between $15 and $25.6. One wallet now holds over $22.4 million worth of the token, suggesting some large-scale investors see value at these lower price levels.

However, this whale interest is set against a backdrop of complex and potentially conflicting supply-side events. The Hyper Foundation has proposed burning 37 million HYPE tokens, which would remove approximately 10% of the circulating supply from the market—a move that could provide long-term support if enacted. Conversely, analyst Ali Martinez reported that an additional 10 million HYPE tokens are scheduled to unlock this month, adding to the 10 million already released since November. This incoming supply could exert further selling pressure on the price in the near term.

Adding another layer to the ecosystem’s treasury management, the Hyperliquid Strategies fund, trading under the ticker $PURR, began operations in early December. This fund holds a significant position of 12.6 million HYPE tokens alongside over $300 million in cash, serving as a treasury reserve linked to the broader Hyperliquid ecosystem.

With a 24-hour trading volume exceeding $550 million and a market capitalization of approximately $6.6 billion, HYPE remains a major asset, currently ranked 25th among all cryptocurrencies. The high volume during the decline indicates active selling and a lack of strong buyer reaction to halt the slide. The immediate challenge for the token is to stabilize and find support, with the $22 level identified by Duo Nine as a critical watch point.

The market now faces a tug-of-war between near-term technical and supply pressures and longer-term supportive factors like potential token burns and strategic whale accumulation. The proposed burn of 37 million tokens represents a significant deflationary mechanism, but its approval and execution remain pending. Until buyers demonstrate sustained conviction or a major supply-side change occurs, the prevailing bearish momentum, evidenced by the broken channel support and weak indicators, suggests the risk of further declines outweighs the potential for a swift recovery. The path forward for HYPE hinges on whether it can establish a durable base of support before the next scheduled token unlock adds to market supply.