Hyperliquid reclaims $20B market cap – Why HYPE’s recovery faces THESE risks

Hyperliquid’s [HYPE] market cap has reclaimed $20 billion after HYPE’s brief rally of about 5% in the past 24 hours as of writing.

While this resurgence appears to be underway, there are conflicting signals that suggest underlying weakness. Here are the details explaining this view:

What’s behind the bullish resurgence?

The news that Kraken’s parent company, Payward, is planning a regulated US Perp launch on Hyperliquid was the driving force behind this small increase. The launch would be enabled through Bitnomial and Ninja Trader Clearing, but it requires approval.

This institutional involvement urged some major players in the market to take action as significant capital started flowing into the token. For instance, a whale bought over 123K HYPE tokens valued at $10 million from Wintermute after a month of inactivity.

Notably, Hyperliquid has led all protocols in holder revenue over the past month with $63.94 million. Therefore, the data showed whales were buying the dip, but there is a risk of counterparty positions now that the data is publicly available.

HYPE breaks a trendline resistance – What’s next?

On the charts, HYPE has broken above a descending trendline resistance that has been in place for the past month.

However, the altcoin is facing resistance at $81, indicating weakness in this potential trend shift. In fact, the MACD was faintly green as of writing, affirming a fragile bullish strength.

Additionally, capital is flowing out of Binance’s perps market. The Chaikin Money Flow (CMF) declined from 0.24 to 0.13, indicating that bulls are struggling to surpass the $81 zone.

But if the buyers can surpass this level, HYPE could trade toward $100, though there are hurdles at $88 and $94.

Why is the upside potential weak?

HYPE’s bullish conviction seems to be lagging as capital is leaving Spot HYPE ETFs issued by Bitwise, Grayscale, and 21Shares. Since the 6th of October, these ETFs have not seen a single day of net inflows, recording a week of outflows recently.

According to SoSoValue, these funds had no activity in the last 24 hours and lost $4.30 million the day before.

Additionally, Bitwise’s BHYP wallet on Hyperliquid received 47.39K HYPE worth $3.71 million from the staking address. The unstaking denoted that institutions could be selling after HYPE’s healthy run.

Therefore, the altcoin’s next move remains uncertain due to the opposing signal from the big players.

Final Summary

• Hyperliquid resurges after Payward’s news of launching perps on the platform, revenue, and whale buying activity. 
• HYPE broke above a trendline resistance, but the shift in trend faces hurdles due to several ETF outflows.