Hyperliquid (HYPE): Navigating Critical Technical Levels Amid Bullish and Bearish Forces

Hyperliquid (HYPE) has emerged as a focal point in the derivatives trading space, but its price action in late 2025 reflects a tug-of-war between bearish technical indicators and bullish sentiment from supply-side interventions. As the token approaches critical support and resistance levels, traders must weigh the implications of stacked EMAs, Bollinger Band dynamics, and the looming token unlock against the potential stabilizing effects of token burns. This analysis dissects the interplay of these forces and outlines actionable strategies for navigating the uncertainty.

Technical Analysis: A Bearish Bias with Oversold Clarity

HYPE's price structure as of December 2025 paints a clear bearish picture. The token is trading below both the 50- and 200-period EMAs, with the 50 EMA at $34.73 and the 200 EMA at $36.97, reinforcing a downward trend. On the 4-hour chart, the price has dropped to $33.78, with RSI hovering at 33.64-close to oversold territory but not yet triggering a reversal signal according to analysis. Bollinger Bands, meanwhile, show the price within the bands, indicating no extreme overextension, though the bands have widened on the 4-hour timeframe, signaling heightened volatility.

Key support levels are clustered between $23.30 and $25.25, while resistance sits at $26.97 to $28.29 according to technical data. The MACD and ADX indicators further confirm bearish momentum, with no signs of a near-term reversal as reported. Traders should monitor these levels closely, as a break below $23.30 could accelerate the downtrend, while a rebound above $28.29 might signal a temporary pause in selling pressure.

Market Sentiment Divergence: Burns vs. Unlocks

While technicals lean bearish, market sentiment is split between optimism and caution. Hyperliquid's proposed token burn of 37 million HYPE tokens (13% of circulating supply) aims to reduce supply ambiguity and reinforce a deflationary narrative according to the team. This move, if approved by validators, could stabilize the token by permanently removing liquidity from the Assistance Fund. Analysts at Cantor Fitzgerald have even projected a $125 billion market cap if the protocol expands into real-world assets.

However, this optimism is tempered by the November 2025 token unlock, which will release 23.8% of the total supply (237.8 million tokens) over 24 months as announced. This event introduces significant selling pressure, with estimates suggesting monthly liquidity risks of up to $500 million, depending on market conditions. The Fear and Greed Index, currently at 35, reflects widespread fear in the ecosystem, hinting at a potential buying opportunity for long-term investors.

The divergence here is critical: technical indicators suggest continued selling, but supply-side interventions could create a floor for the price. The market's response will hinge on whether Hyperliquid's buyback programs-already burning 8–9% of total supply-can absorb the new liquidity according to market analysis.

Strategic Implications: Entry, Stop-Loss, and Target Levels

Given the conflicting signals, traders should adopt a dual approach:

Bearish Scenario

• Entry: Short positions could be initiated near $25.25, a key support level.
• Stop-Loss: Place stops above $26.97 to avoid false breakouts.
• Targets: A breakdown below $23.30 could target $21.00–$20.50, with the 200 EMA ($36.97) acting as a distant ceiling if the trend reverses.

Bullish Scenario

• Entry: Long positions might target $23.30, with a stop-loss below $22.00 to manage risk.
• Targets: A rebound above $28.29 could test the 50 EMA at $34.73, though this would require a significant shift in sentiment.

For both strategies, monitoring the Chaikin Money Flow and EMA crossovers will be critical. Additionally, the outcome of the validator vote on the token burn could act as a catalyst-approval might trigger a short-term rally, while rejection could deepen the bearish bias.

Conclusion

Hyperliquid (HYPE) sits at a crossroads in late 2025. The technical case for a continuation of the downtrend is strong, but the interplay of token burns and unlocks introduces a layer of complexity. Traders must balance the immediate bearish momentum with the potential for supply-side interventions to stabilize the price. As the November 2025 unlock unfolds, liquidity management and transparency will be key to determining whether HYPE can transition from a bearish narrative to a more balanced one.