Will Hyperliquid Holders Bow To Bearish Pressure After Its Recent ATH?

• Smart money injects more liquidity into HYPE but the bulls struggle to maintain steady upside.
• HYPE sentiment shifts further into bearish expectations after recording the largest long liquidations in 6 months.
• Why robust utility on Hyperliquid has been propping up HYPE price.

Hyperliquid has recently been making headlines mostly because of its performance and heavy adoption by some of the top whales in crypto. Its native coin HYPE has also been receiving a lot of attention especially with its latest price performance.

The Hyperliquid native coin has been on a steady rally since early April. HYPE price soared to a new historic high just above $44 on Wednesday after an impressive 365% gain from its lowest YTD levels.

However, the bulls appeared to be losing their momentum since then. This observation was also characterized by a bearish signal in the form of a price-RSI divergence.

HYPE price action: TradingView

While the price-RSI divergence signaled higher potential for a sizable pullback, recent data revealed that accumulation by whales and institutions has been sustaining the upside. This was also evident in the MFI indicator which revealed a surge in liquidity inflows in the last 5 days.

Is Hyperliquid sentiment shifting to negative territory?

HYPE price has been showing off strong but the RSI’s decline signaled declining momentum.  This suggests that an eventual retracement might be occur in the second half of June.

Some on-chain data suggests that the way of sell pressure might already be on the way. For example, HYPE long liquidations surged to $2.11 million on Friday, against less than $900 million in short liquidations during the same day.

HYPE liquidations: source: Coinglass

Interestingly, there was a noteworthy surge in long liquidations in the last 7 days. Shorts cooled down significantly during the same period, signaling that a shift in market sentiment was at play.

Meanwhile, open interest clocked a new peak at $1.90 billion in the last 24 hours. This meant that there was higher incentive for smart money to trigger liquidations.

Derivatives volumes also surged to $3.3 billion on 14 June which marked its highest recorded daily volume figure.

HYPE derivatives volumes: Source: Coinglass

The big question now is whether these factors could fuel more demand for HYPE rather than signal its recent sensitivity to liquidations. Perhaps the answers might be found in the reasons behind the cryptocurrency’s robust demand in the last 2 months.

Can Hyperliquid performance offer insights into HYPE performance?

Aside from HYPE price soaring to a new ATH in the last 7 days, the Hyperliquid also achieved new histori highs in other key areas. For example, stablecoin liquidity surged as high as $3.88 billion on Thursday but has since cooled down slightly.

The total value locked in the Hyperliquid layer 1 network jumped to new territory at $1.795 billion in the last 24 hours. These metrics highlighted the aggressive growth that has been taking place in the network.

The underlying reasons behind that growth was the massive adoption of the Hyperliquid DEX observed in the last few months. For context, DEX volume dipped as low as $50.9 million during its lowest day on 5 April. It has been growing aggressively since then and recently peaked above $735 million on Friday.

Hyperliquid DEX volume: Source: DeFiLlama

The robust demand for Hyperliquid this year has allowed its layer 1 network to tap heavily into the value flowing within its ecosystem. That value has undoubtedly trickled down into HYPE price action.

But how has the demand translated to HYPE’s aggressive bullish performance? Aside from the previously mentioned demand from smart money, the coin is also used as payment transactions, governance, providing liquidity and staking for passive rewards.

The same factors may also determine how HYPE price action will move in the next few weeks. If key metrics such as TVL and DEX volume continue to rally, then this could fuel more confidence in the cryptocurrency and limit its downside. On the other hand, sharp pullbacks in the same metrics may signal a heavy bearish outcome.

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