Hyperliquid (HYPE): Assessing the $24 Support and Long-Term Value Amid Supply Burns and Market Volatility

Hyperliquid (HYPE) has emerged as a focal point in the derivatives trading space, but its recent price action and structural developments have sparked intense debate among investors. As the token stabilizes near $26-a critical juncture above the S1 Pivot Point-analysts are scrutinizing whether this level can hold amid bearish momentum and a looming supply burn event. This article dissects HYPE's technical and fundamental dynamics to evaluate its $24 support level and long-term value proposition.

Technical Analysis: A Bearish Crossroads

HYPE's price trajectory has been volatile in late 2025, with the token oscillating between bullish rebounds and bearish breakdowns. Currently trading at $24.71, HYPE faces a pivotal test at the $26.06 support level, which, if breached, could trigger a cascade toward the October 10 low of $20. Technical indicators paint a mixed picture: the RSI (14) sits at 33.89, signaling neutral conditions, while the MACD trend remains downward, reflecting bearish momentum. Meanwhile, the Fear & Greed Index, at 16, underscores widespread pessimism among crypto investors.

A critical technical concern is the recent breakdown below the $30 descending triangle base, which analysts like Ali Martinez argue could signal a path toward $24 if downward momentum persists. However, on-chain data reveals a potential rebound scenario: the RSI at 28.88 suggests oversold conditions, and a hold above $26.5 could reignite bullish sentiment. The 50-day and 200-day SMAs remain bullish, as HYPE trades above these trendlines, but the broader forecast remains bearish, with predictions of a -22.76% decline to $19.46 by December 22.

Fundamental Analysis: Supply Burns and Market Sentiment

Hyperliquid's fundamentals are being reshaped by a landmark governance event: the Hyperliquid Foundation's proposal to permanently burn 37.11 million HYPE tokens (3.71% of total supply) from its assistance fund. These tokens, already locked in an address without a private key, will be removed via stake-weighted consensus, with results expected by December 24. Analysts view this as a structural bullish shift, as it reinforces a deflationary model and reduces circulating supply.

The market has already priced in optimism: Open Interest (OI) surged 1.63% to $1.53 billion in the last 24 hours, reflecting growing long positions. The OI-weighted funding rate of 0.0839% further highlights acute buying pressure. However, on-chain metrics reveal a cooling in user engagement, with active smart contract addresses declining 21.97% from their November peak to 168,833 as of December 15. This divergence between trading volume and user activity raises questions about the sustainability of HYPE's deflationary narrative.

A larger supply burn-potentially removing 13% of the circulating supply-is also on the horizon, contingent on validator approval by December 24. If executed, this would represent one of the largest supply reductions in HYPE's history, potentially enhancing scarcity and institutional appeal.

Market Volatility and Strategic Implications

HYPE's ecosystem is characterized by extreme volatility. While weekly trading volume averaged $47 billion in early 2025 (up from $13 billion in Q4 2024), recent 24-hour volume plummeted 22% to $246.65 million following a $314 million token unlock on November 29. This liquidity shock amplified selling pressure, testing the $24 support level.

For long-term investors, the key variables are:
1. Validator Vote Outcome: A successful burn could catalyze a re-rating of HYPE's value proposition, particularly in a competitive DeFi landscape.
2. $26.5 Support Hold: A sustained rebound above this level could reignite bullish momentum, with potential targets at $38–$52 if volume expands.
3. On-Chain Engagement: A reversal in the decline of active addresses would signal renewed user confidence.

Conclusion: A High-Risk, High-Reward Proposition

Hyperliquid (HYPE) occupies a precarious position at the intersection of bearish technical indicators and bullish fundamental catalysts. While the $24 support level remains a critical floor, its defense hinges on both the validator vote's outcome and the market's ability to absorb selling pressure. For risk-tolerant investors, the deflationary supply adjustments and potential for a double-bottom reversal present compelling opportunities. However, the bearish RSI and MACD trends, coupled with declining user activity, underscore the need for caution.

As the December 24 deadline approaches, HYPE's next move will likely hinge on whether its structural reforms can outweigh its technical headwinds-a test that could redefine its trajectory in 2026.