Analyzing Hyperliquid’s slip below $42: What’s next for HYPE?

The bearish outlook for Hyperliquid’s HYPE token continued to build as selling pressure intensified across the market.

On the 20th April, HYPE declined over 6.15%, trading at $41.05 at press time. At the same time, trading volume surged 101% to $348.95 million.

That combination suggested active participation, even as sellers drove price lower.

Is HYPE’s structure breaking down?

The daily chart showed Hyperliquid [HYPE] maintained a higher high and higher low structure. However, the range tightened as the price moved higher.

That narrowing pattern resembled a rising wedge, which often precedes downside moves.

If the price drops below $40.30, the next downside target may emerge near $36.70. However, holding above $41 could still support a short-term recovery attempt.

Momentum indicators pointed to weakening strength.

RSI dropped to 52.70, signaling fading bullish momentum and a shift toward neutral conditions.

At the same time, ADX rose to 26.66, indicating a strengthening trend despite slowing momentum. That mix showed price direction remained firm, even as buying pressure eased.

Are whales and traders positioning for downside?

Data from analytics platform Nansen reveals that HYPE’s top 100 addresses have reduced their holdings by 39.99%, pointing to rising selling pressure and a potential sell-off signal.

Meanwhile, derivatives data reflected similar sentiment.

The Liquidation Map highlighted key levels at $40.30 and $42.30, where traders remained overleveraged.

Around $4.95 million in long positions sat below the price, while $8.72 million in shorts clustered above. That imbalance suggested traders expected further downside in the near term.

Despite the bearish sentiment, data from DeFiLlama highlights consistent strength in the protocol’s revenue, fees, and DEX volume. Recurring short-term dips followed by quick recoveries indicate sustained user activity and healthy market participation.

Final Summary

• HYPE dropped over 6%, with volume rising sharply, showing strong participation despite downward pressure
• Hyperliquid’s liquidation data shows heavier short positioning above price, reinforcing expectations of continued downside