Hyperliquid Token Drops 6% After Recent Highs

The Hyperliquid token (HYPE) experienced a notable decline, falling by over 6% in Thursday trading, marking its lowest point in 10 days. This drop comes just three days after the token reached an all-time high of $45.59. Despite this recent setback, HYPE remains up by more than 40% over the past 30 days, driven in part by its dominant position in perpetual futures trading volume. Perpetual futures allow for unusually high amounts of leverage, and the token debuted in December 2024.

The decline in HYPE's value occurred on a relatively quiet trading day, as the U.S. observed the Juneteenth national holiday. Most major altcoins were in negative territory or flat, with minor declines observed in tokens like XRP and Solana. The overall market capitalization of the crypto market dipped by 2.5%.

Analysts attributed the drop in HYPE's value to a retreat by investors who had recently loaded up on the token following large buy-ins by Eyenovia and Lion Group. Eyenovia, a NASDAQ-listed U.S.-based ophthalmic technology firm, raised $50 million via a private equity deal to buy over 1 million Hyperliquid tokens earlier this week. Similarly, Singapore-based trading platform Lion Group Holdings announced it had secured a $600 million credit facility to build a crypto reserve that will include Hyperliquid.

Rajiv Sawhney, head of international portfolio management at a crypto asset management firm, noted that this phenomenon of corporate announcements driving market activity has become more common. He explained that the market tends to buy into the hype following such announcements and then sells off afterward. Additionally, Sawhney highlighted conventional trading trends, noting that given HYPE's recent all-time highs, some reversion was expected as the broader market has seen light volumes and direction.

Illia Otychenko, lead analyst at a cryptocurrency exchange, pointed to a 50% decline in trading volume since mid-May and the platform's "buy-and-burn mechanism" as contributing factors to the decline. The buy-and-burn mechanism, where HYPE is automatically purchased whenever users pay trading fees, had been a key driver of the recent rally. However, as platform activity slows, this price-supporting mechanism has weakened, removing a major source of upward pressure.

Despite the recent price correction, the Relative Strength Index (RSI) indicates a bullish outlook for HYPE, with a reading of 53, suggesting that the momentum remains strong. If the token can create a higher low and overcome the resistance at the upper trendline of the ascending channel at $46, it may rise by 70% to print a fresh all-time high at $68. However, the Awesome Oscillator (AO) histogram bars suggest that the bullish trend is weakening. If the price fails to shift this outlook and continues to test the lower boundary support, it may invalidate the bullish outlook and force it to drop to the 61.8% Fibonacci level of $32.

Large wallets, or whales, have been actively involved in the HYPE market, opening long positions worth over $12 million in the last 24 hours. This behavior indicates that these investors are optimistic about the token's potential for further gains. Two of these whales would be liquidated if the price falls to $25 or $28, suggesting that they are confident in the token's ability to rebound. The overall market sentiment and the actions of these whales suggest that the HYPE token may continue its upward trend, potentially reaching a fresh all-time high in the near future.