Have you ever watched a promising crypto asset climb to impressive heights, only to see it stumble and start rolling downhill, leaving traders wondering if the fun is over? That’s pretty much the story with Hyperliquid’s native token, HYPE, right now. Sitting around the mid-$20s as we kick off 2026, it’s hard not to notice the persistent selling pressure that’s kept bulls at bay.
I’ve been tracking this one closely, and honestly, the charts aren’t painting a rosy picture just yet. But let’s dive in properly – there’s more to this than just red candles.
Understanding Hyperliquid’s Bearish Market Structure
Hyperliquid has been one of the standout performers in the decentralized perpetuals space. Its on-chain order book DEX has pulled in massive volumes, often outpacing competitors, and the platform continues to see healthy inflows even as the token price dips. Yet, despite these strong fundamentals, HYPE has been stuck in a clear downtrend since peaking above $50 last year.
The key issue? A classic bearish setup defined by a series of lower highs and lower lows. Each time price rallies toward previous resistance, sellers step in aggressively, pushing it back down before any real breakout can materialize.
The Critical Rejection at Higher Time Frame Resistance
One level that’s been particularly stubborn is around $28. This zone isn’t random – it lines up with previous swing highs and acts as a confluence area where volume profiles show significant overhead supply.
Recently, HYPE pushed up toward this mark, teasing bulls with what looked like a potential reclaim. But no – it got rejected hard, forming yet another lower high. In my experience, these failed retests in a downtrend are often reliable signals that the path of least resistance remains lower.
When price repeatedly fails to hold above key resistance on higher time frames, it reinforces seller control and increases the odds of continuation.
It’s frustrating for holders, sure. But markets don’t owe us recoveries just because fundamentals look solid.
Breaking Down the Price Action Patterns
Looking at the daily and weekly charts, the structure is unmistakably bearish. After the sharp breakdown from the $50s, we’ve seen corrective rallies that consistently fall short.
- Initial drop created the first lower low
- Subsequent rally formed a lower high below prior peaks
- Further decline produced another lower low
- Recent bounce rejected again, printing fresh lower high
This repeating pattern isn’t accidental. It shows that demand isn’t strong enough to absorb supply at higher levels. Momentum indicators have faded on approaches to resistance, while downside moves pick up volume.
Perhaps the most telling aspect is how quickly buying dries up near those overhead zones. It’s like the market is waiting for any excuse to sell.
Key Support Levels and Potential Downside Targets
So, where could this lead if the bearish bias holds? The next major area watchers are eyeing sits around $19.
This isn’t pulled out of thin air. $19 aligns with prior reaction lows and represents a logical extension of the current trend channel. A clean break below recent swing lows would open the door for a relatively swift move there.
Of course, crypto being crypto, we could see overshoots or wicked downs before any meaningful bounce. But structurally, $19 feels like the near-term magnet while sellers remain in the driver’s seat.
| Level | Type | Significance |
| $28 | Resistance | Multiple rejections, overhead supply |
| $24-25 | Intermediate | Recent consolidation zone |
| $19 | Major Support | Prior lows, trend continuation target |
Why Fundamentals Aren’t Saving the Price Yet
Here’s where it gets interesting. Hyperliquid the platform is actually doing great – record volumes in perps trading, consistent revenue, token burns from fees, and net inflows even during dips. You’d think this would propel HYPE higher, right?
Not necessarily in the short term. Token unlocks have been a persistent overhang, adding supply at regular intervals. Competition in the perps DEX space is heating up too, with new players vying for market share.
Plus, broader market sentiment plays a huge role. When risk appetite cools, high-beta tokens like exchange natives tend to suffer more than blue chips.
Strong platform metrics don’t always translate immediately to token price appreciation, especially when supply dynamics and macro conditions weigh in.
Momentum and Volume Insights
Diving deeper into the tapes, volume profiles show clusters around those rejection zones. Selling volume spikes on tests of resistance, while buying volume remains tepid.
Momentum oscillators are mixed – not deeply oversold yet, which suggests room for further downside before any exhaustion signals emerge. RSI on higher time frames sits in bearish territory without divergence so far.
It’s that lack of bullish divergence that worries me most for any imminent reversal attempts.
What Would Change the Bearish Outlook?
To be fair, this isn’t doomed forever. A decisive close above $28 on solid volume would flip the script, potentially invalidating the lower high sequence and opening upside toward previous breakdown areas.
- Strong reclaim of $28 resistance
- Higher high formation on daily/weekly
- Increasing volume on upside moves
- Positive divergence in momentum indicators
Until we see those, though, it’s hard to get aggressively bullish. Rallies feel more like short-covering or dead-cat bounces than genuine trend changes.
Broader Market Context and Correlations
HYPE doesn’t move in isolation. It tends to correlate with risk assets – when Bitcoin and Ethereum pump, altcoins like this often amplify moves. But in corrections, they amplify downside too.
With the overall crypto market showing some fatigue after last year’s run, it’s no surprise exchange tokens are feeling the heat. DeFi narratives have cooled a bit as attention shifts elsewhere.
Still, Hyperliquid’s dominance in on-chain perps gives it a moat that’s hard to ignore long-term.
Risk Management Considerations for Traders
If you’re trading this, position sizing is crucial. The volatility here can be brutal – we’ve seen 10%+ daily swings regularly.
Short-term traders might look for fades of rallies into resistance. Longer-term holders could consider accumulating near major supports, but only with clear invalidation levels.
Personally, I’d wait for structural confirmation before committing heavily either way.
Long-Term Perspective: Reasons for Optimism
Zooming out, Hyperliquid remains one of the most innovative projects in DeFi. A fully on-chain perpetuals exchange with sub-second finality and zero gas for trades? That’s groundbreaking.
As adoption grows and more liquidity flows in, the token economics – with fee buybacks and burns – could start shining through. Many successful projects have endured painful bear phases before rewarding patience.
The question is timing. Are we close to capitulation, or is there more pain ahead?
Bottom line: the bearish structure on HYPE remains firmly intact, with $19 looking like a realistic near-term target if current levels give way. Fundamentals are impressive, but price action is king in trading, and right now it’s telling a story of distribution.
That said, markets can turn on a dime. Keep an eye on that $28 level – a clean break higher could change everything. Until then, caution seems warranted.
What do you think – is this just healthy consolidation before the next leg up, or are we heading lower first? Drop your thoughts below.
