Hyperliquid (HYPE) has recently faced significant price stagnation, maintaining its value around $30. The formation of a symmetrical triangle pattern suggests that HYPE could move in either direction.
However, the current market sentiment indicates a bearish outlook, leaving many investors uncertain about the short-term future of the token.
Short traders on Hype have a lot to lose
HYPE is potentially facing a short squeeze, which could act as a catalyst for price growth. The liquidation heatmap shows that approximately 2.81 million dollars in short contracts will be liquidated if the price of HYPE exceeds the threshold of $35. Short squeezes often cause sudden price spikes, as bearish sentiment decreases and short positions are forced to close.
However, this bullish scenario can only materialize if HYPE holders show strong support for a price increase. In the absence of sufficient buying interest, the short squeeze may remain an unrealized opportunity, leaving HYPE's price movement stuck in the current range. The key to a potential upward breakout lies in investors' confidence and their willingness to support price increases.
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The momentum of the overall market conditions for HYPE is not as favorable. The Chaikin Money Flow (CMF) indicator shows that outflows currently prevail for HYPE. When the CMF value drops below the zero line, it indicates that inflows are drying up and outflows are taking over. This signals a change in investor sentiment, as more and more participants are losing confidence in HYPE's potential.
The negative CMF reading highlights that the recent price movement is not supported by solid demand. On the contrary, it seems that investors are moving away from the asset, thus strengthening the short-term bearish outlook for HYPE. The current trend in outflows suggests that the token may struggle to recover unless there is a significant change in investor sentiment.
Currently, HYPE is trading at $30 and is moving within a symmetric triangle pattern. The technical factors, including the bearish sentiment and CMF readings, indicate a downside risk. If the price fails to break the resistance at $33 and maintain the momentum, it could drop below $30 and continue the bearish trend.
If HYPE loses the support at $30, the next relevant support is at $28, marked by the 61.8% Fibonacci retracement level. This support zone is crucial, as it represents an important floor for a potential return of bullish momentum. However, if this level were to give way, HYPE could register further declines, reaching $25 with the possibility of dropping to $20 if selling pressure intensifies.
On the other hand, if investor sentiment were to turn positive and buying momentum increased, HYPE could break the resistance at $33. A breakthrough of this threshold would push HYPE towards $36, triggering the short squeeze. This scenario would negate the bearish outlook and could favor further price increases, initiating a recovery phase for HYPE.