Following a major scandal on the Hyperliquid trading platform, the HYPE token plunges over 14%. With mounting security concerns about the protocol, what is the true reliability of Hyperliquid for users?
Hyperliquid (HYPE) is going through unprecedented turmoil after a whale manipulated the price of the JELLY token, causing nearly $12 million in losses for the liquidity provider of the protocol (HLP). Faced with this situation, Hyperliquid had to announce the delisting of JELLY, but the damage to investor confidence was already done.
Indeed, the price of the HYPE token plummeted by over 22% in just 24 hours, dropping its market cap below the $5 billion mark. Investors are now fearing further instability and the possibility of similar attacks on the platform.
The technical indicators of HYPE clearly reflect the negative impact of this news. Its Relative Strength Index (RSI) has dropped to 27.70 in 3H, from 67 just two days ago, indicating a strong shift to a bearish trend. In fact, the token has exited its upward channel. This could also lead to smart money accumulation as retail investors panic.
Although not yet in extreme oversold territory, this level indicates seller control and hints at further declines if investor sentiment does not improve quickly.
Furthermore, the BBTrend, which measures trend strength, has decreased from 10 to 6.97, showing a significant weakening of the bullish momentum, although it remains positive. If this measure continues to decline, it could confirm a slowdown in positive momentum, keeping HYPE under pressure.
The Chaikin Money Flow has also turned back to red, indicating an outflow of capital. However, it is displaying a higher score than on March 18th, when it was trading at a lower price of $12. This is a divergence that could signal a reversal.
Ichimoku has turned back to red in 3H. HYPE will need to quickly climb back above $15.9 to sustain its upward movement.
If the current correction continues, HYPE could soon test a key support at $13.91. A downside break of this level would likely add additional selling pressure, with supports at $12.82 and $12.06 in case of further decline.
Conversely, if HYPE manages to bounce back from the prevailing negative sentiment, it could attempt to break the resistance at $17.03, a level it tried to reach just three days ago without success. Beyond that, a bullish momentum could drive it up to $19.2 or $21.8, the 50 and 100-day moving averages.
In conclusion, the JELLY incident has severely dented investor confidence in the Hyperliquid platform, evident by the 22% drop in HYPE price. While technical indicators hint at further short-term declines, a rebound is still possible if Hyperliquid manages to reassure on the solidity of its model and ecosystem security. The protocol’s reliability will now be closely scrutinized by the crypto community.
Charles Ledoux is a Bitcoin and blockchain technology specialist. A graduate of the Crypto Academy, he has been a Bitcoin miner for over a year. He has written numerous masterclasses to educate newcomers to the industry and has authored over 2,000 articles on cryptocurrency. Now, he aims to share his passion for crypto through his articles for InvestX.
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