Hyperliquid News Today: "HYPE's Crucible: Bullish Momentum vs. HLP's $5M Liquidity Crisis"

Hyperliquid's native token, HYPE, faces a pivotal moment as mixed signals emerge from market dynamics and technical indicators. The token recently reclaimed $42.00, buoyed by a 4% rise in its DeFi Total Value Locked (TVL) to $2.15 billion, reflecting renewed risk-on sentiment in the crypto market, according to FXStreet. However, the Hyperliquid Provider (HLP) liquidity pool absorbed a $4.9 million loss following a deliberate manipulation incident involving the meme token POPCAT, raising concerns about the platform's resilience, as reported by FXStreet.

The bullish momentum for HYPE has been fueled by broader market optimism, including the U.S. Senate's resolution of a government shutdown and growing demand for DeFi staking protocols, according to FXStreet. Traders are increasingly allocating capital to Hyperliquid long positions, with the Open Interest-Weighted Funding Rate climbing to 0.0085% on Monday, signaling heightened speculative activity, as noted by FXStreet.

Meanwhile, the token's technical outlook appears cautiously optimistic: HYPE trades just below the 50-day and 100-day EMAs at $42.64, with the RSI at 50 and the SuperTrend indicator flipping to bullish territory, according to FXStreet. Analysts suggest a potential breakout above $42.64 could target $50.00, though a failure to hold this level risks a retest of the $35 support zone, as noted by FXStreet.

Yet the recent stress test on HLP has cast a shadow over Hyperliquid's stability. A whale exploited liquidity gaps in the POPCAT market by spoofing buy orders, triggering a cascade of liquidations that forced HLP to absorb significant losses, as reported by Cryptopolitan. This incident mirrors prior vulnerabilities exposed through tokens like JellyJelly and TST, underscoring systemic risks for niche pools on the platform, as reported by Cryptopolitan. The HLP's role as a safety net was further questioned as it struggled to manage the $30 million long position before manual intervention, as reported by Cryptopolitan. While Hyperliquid paused its Arbitrum bridge temporarily, the broader implications for liquidity providers remain unresolved, according to FXStreet.

Technical analysts highlight diverging signals for HYPE. ShardiB's chart analysis notes a critical support range between $42–$43, with volume stabilizing after recent volatility, according to BraveNewCoin. Meanwhile, Tobias Reisner's valuation metrics indicate undervaluation, with the Supply-Weighted P/E Ratio (SWPE) dropping below 3-a level historically associated with accumulation phases, according to BraveNewCoin. However, bearish indicators persist: the MACD has crossed below its signal line, and the RSI at 43 suggests lingering selling pressure, as reported by FXStreet. A decisive close below $35 could extend the decline toward the $30 level, previously a key psychological barrier, as reported by FXStreet.

The broader crypto market offers mixed support for HYPE. ETF inflows into altcoins like HBAR and XRP have surged, with the Canary HBAR ETF amassing $69 million in assets and XRP hitting a two-week high of $2.60, according to Cryptopolitan and FXStreet. These trends reflect growing institutional interest in DeFi and layer-1 protocols, which could indirectly benefit Hyperliquid. However, the platform's recent struggles with liquidity management and governance responses will likely influence HYPE's trajectory in the near term.

As traders weigh these factors, the coming weeks will test Hyperliquid's ability to balance innovation with risk mitigation. A sustained rebound above $43 could reignite bullish sentiment, while further slippage in HLP's backstop capacity may deepen skepticism about the token's long-term viability.