HYPE price at risk of crash as technicals remain bearish and whales sell

HYPE price continued its downtrend for the sixth consecutive day, as whales sold off holdings as Hyperliquid competitor Aster surpassed the former in terms of both volume and revenue.

According to data from crypto.news, Hyperliquid (HYPE) was trading at $44 last check Sep. 24, afternoon Asian time. It has fallen 10% over the past 24 hours and 25.5% from its all-time high of $59.06 recorded on Sep. 18.

However, HYPE’s price soon entered a downtrend after market attention turned to Aster, a multi-chain perps DEX and a direct competitor to Hyperliquid.

Since its debut on Sep. 18, Aster has quickly climbed to the top of the perpetual DEX leaderboard, with DefiLlama data showing $21.89 billion in 24-hour trading volume, more than double that of Hyperliquid, which recorded $9.72 billion during the same period.

Some of this downturn was partly fueled by a major liquidation event that unfolded earlier in the week, but Aster’s rapid rise also appears to have diverted both trader interest and liquidity away from Hyperliquid.

Traders seem to have rotated some of their gains from HYPE’s early week rally into Aster (ASTER), which has surged roughly 2,160% since trading went live last week. During the same period, HYPE has dropped over 26%.

Making matters worse, Arthur Hayes, co-founder of BitMEX and a major HYPE holder, sold his entire stash of Hype holdings worth $5.1 million at that time.  Less than 24 hours after Hayes dumped his holdings, an early HYPE whale reportedly offloaded over 200,000 HYPE tokens valued at approximately $8.93 million when it was sold.

Retail money is known to follow big wallets, and the back-to-back exits by major holders may have triggered a wave of panic selling among smaller investors.

According to data from Coinglass, over the past 24 hours, Hyperliquid recorded total liquidations worth $2.36 million, with long positions making up the bulk at $2.22 million.

At the same time, the long/short ratio for HYPE has remained elevated across all timeframes, with roughly 74% of traders continuing to bet on upside. This goes to show that bullish conviction hasn’t fully faded yet, even as price action weakens. However, this could leave the market exposed to further long-side liquidations if sentiment fails to turn.

Traders may have also considered a massive token unlock that is slated for late November when assessing HYPE this week. According to data from DeFiLlama, the perpetual decentralized exchange will see nearly 238 million HYPE tokens begin vesting linearly over 24 months. 

At an average price of $44, this equates to approximately $10.47 billion in potential supply, equivalent to nearly 88% of the current circulating supply of 270.7 million tokens. This means approximately $436 million worth of tokens will be released each month.

While Hyperliquid may be able to absorb a portion of the monthly token releases through its buyback mechanism, the majority would still be exposed to open market sales.

HYPE price analysis

On the daily chart, HYPE had dropped below a key trendline that has historically stood as a strong support line for the token since April this year.

With the drop, the token has also slipped below the 50-day simple moving average, a sign that bears are currently in control of the market.

At the same time, the upper and lower Bollinger bands have moved further apart. In technical analysis, this is a telling sign of growing market volatility.

When writing, HYPE price was approaching the lower band, which signals oversold levels, but that doesn’t mean buyers could step in just yet. Further downside remains possible if bearish momentum persists.

The Aroon indicator adds strength to this bearish outlook, with the Aroon Down at 100% while the Aroon Up is at 57.14%. 

Based on this setup, $40.69, a level that aligns with the 61.8% Fibonacci retracement, currently stands as the key support level. A drop below this could see the price moving towards $35.50, the token’s August low.

On the contrary, the key resistance level stands at $52.12, marked by the 50-day SMA. A successful reclamation of this level may help push the momentum in favor of the bulls.