Hyperliquid loses KEY support – Can a bear trap send HYPE to $100?
Bearish on-chain signals clash with tightening HYPE supply as Binance reopens withdrawals.
Is Hyperliquid’s [HYPE] current breakdown a potential bear trap before a $100 breakout?
Notably, analysts are not convinced. According to one analyst, Hyperliquid is breaking out of its rectangular consolidation pattern over the last 2 months. The key level to watch here is $75. If HYPE cannot hold this, then $64 is the next key level to watch, followed by $53. However, with HYPE already trading below the $75 level following a 2% intraday dip, the technical picture is becoming more bearish.
On top of this, Lookonchain highlighted that a whale has unstaked 512,010 HYPE tokens worth approximately $39.3 million and deposited them into FalconX, possibly to sell. In essence, weakening price action and a large whale transfer are adding to bearish pressure.
Naturally, this raises the question: Is a drop toward $53 becoming more likely?
Binance has now reopened the withdrawal of HYPE tokens after the $6.3 billion hack. This means that users will be able to move HYPE off the exchange. If withdrawals pick up, exchange balances could decline, potentially tightening the available supply and creating conditions for a supply squeeze.
So, if this trend holds, could bulls flip the bearish Hyperliquid setup into a classic bear trap and catch late shorts off guard? With overall market sentiment in extreme fear, an unexpected reversal could trigger a sharp short squeeze, potentially setting HYPE up for a repeat of its late-July rally.
Bearish HYPE signals clash with emerging supply shock
HYPE’s historical price action suggests another rally toward price discovery cannot be ruled out.
Following a dip back to $50 in mid-Q2, HYPE showed some serious strength, moving into price discovery territory and hitting an all-time high of almost $95. With a similar technical setup starting to take shape, another rally remains possible. The fact that Binance has reopened withdrawals will also help in terms of creating this price discovery condition by allowing tokens to move off exchanges.
On-chain activity is also providing a bullish signal. According to On-chain Lens, in the past 24 hours, Hyperliquid has burned $1.06 million of HYPE. This is a buyback process where HYPE is purchased using revenue from the protocol. The HYPE is then destroyed and removed completely from circulation.
More importantly, the pace of buybacks could increase if protocol revenue continues to rise.
As shown on the chart, Hyperliquid’s revenue has risen by 20% in under 24 hours, adding nearly $290k. Higher revenue could translate into larger buybacks, which can increase the amount of HYPE being removed from supply. This can provide further support for a recovery if the altcoin begins to see a rise in demand.
This is where HYPE’s historical price action and Binance’s withdrawal reopening become important. The continued buybacks and possible shortages mean a drop down to $53 is too much of a stretch. Instead, the breakdown could result in a bear trap, which catches late shorts and creates a July-style rally. Thus, a move toward $100 could still be on the cards for November.
Final Summary
- HYPE’s drop below $75 and a $39.3 million whale transfer to FalconX are adding to selling pressure.
- However, Binance reopening withdrawals and ongoing token buybacks could reduce HYPE’s available supply.
