HYPE price crashes as Hyperliquid volume plunges, dilution risks rise

Hyperliquid, the popular perpetual decentralized exchange, is under intense pressure as its token nears a record low and its network volume plunges.

Hyperliquid (HYPE) token plunged to a low of $11.10, down by 67% from its record high of $35.20. This crash has brought its market cap from near $10 billion in December to $3.8 billion.

The HYPE token has crashed partly because of its substantial dilution risks. According to CoinnMarketCap, it has a total supply of near 1 billion tokens, with 333 million being in circulation.

Hyperliquid’s token unlocks will start in November this year, when the network will start releasing 216,580 HYPE tokens worth $2.52 million daily. The final unlock will happen in November 2028. Token unlocks, especially without a burning feature, lead to higher inflation and dilution of existing token holders.

HYPE price has also crashed as the network faces major challenges after the JELLY crisis. In it, the developers delisted the token abruptly leading to substantial losses among investors.

The crisis has led to lower activity in the network. DeFi Llama data shows that the perpetual futures volume dropped to $175 billion in March, the second consecutive month of decline. This volume peaked at almost $200 billion in January as Solana meme coinssurged.

Hyperliquid’s seven-day volumes dropped by over 27% to $38 billion, while the daily volume fell by 70% to $2.4 billion.

The same trend has happened on Hyperliquid’s layer-1 network, the volume of which dropped by 28.5% to $702 million.

HYPE price technical analysis

Hyperliquid price chart | Source: crypto.news

The 4H chart shows that the Hyperliquid price has crashed from $35.12 to $11.6. It recently dropped below the crucial support level at $12.11, its lowest point on March 13.

Moving below that level invalidated the formation of a double-bottom pattern.

The token has also formed a bearish flag pattern, which is characterized by a vertical line and a rectangle consolidation. This is a highly popular bearish continuation pattern in technical analysis.

HYPE price has moved below the 50-period moving average. Therefore, the token will likely continue falling as sellers target its all-time low of $10.45. A move above the resistance at $13.37 will invalidate the bearish outlook.