Hyperliquid ($HYPE) extended its losses on Monday, falling more than 2%, as broader weakness in the cryptocurrency market weighed on investor confidence.
Even though institutional investors continued to pour money into $HYPEFocused on exchange-traded funds (ETFs), bearish signals from the derivatives market suggest that retail traders are becoming increasingly cautious, increasing the risk of further declines in the near term.
Pressures from risk aversion $HYPE
This latest decline comes as geopolitical tensions involving the United States and Iran over the Strait of Hormuz continue to fuel a broader environment of risk aversion in financial markets.
Like many altcoins, Hyperliquid has struggled to generate new buying interest as investors reduce their exposure to higher-risk assets.
Recent derivatives data from CoinGlass highlights weakening sentiment among leveraged traders.
Hyperliquid Open Interest (OI) futures declined more than 1% in the past 24 hours to around $2.7 billion, indicating a reduction in actively leveraged positions.
Lower open interest alongside falling prices often indicates that traders are closing positions rather than opening new bullish bets.
During the same period, total liquidations reached $2.8 million, with approximately $2.3 million coming from long positions.
The imbalance suggests that bullish traders have been driven out of the market, reinforcing the current selling pressure.
The bearish outlook is further reinforced by a sharp decline in $HYPEthe financing rate, which fell to 0.0275%.
This decline reflects a growing preference among traders for short positions, indicating expectations of a continued decline in the near term.
Despite weakness in derivatives markets, institutional demand for Hyperliquid remains resilient.
According to CoinGlass data, $HYPETargeted ETFs saw $10.36 million in net inflows last week, extending their streak to nine consecutive weeks of positive flows.
Steady institutional buying contrasts with weakening retail confidence and suggests that investors with longer time horizons continue to accumulate the asset despite recent price volatility.
Hyperliquid Price Outlook: 50-Day EMA Becomes Key Support
$HYPE is currently trading around $65, having broken through a key ascending trendline that previously provided support near $68.50.
Attention has now shifted to the 50-day exponential moving average (EMA) at $63.13, which represents the next important support level.
A decisive daily close below the 50-day EMA could accelerate the selling pressure and expose the token to the next support level at $53.71.
Technical indicators suggest that the bullish momentum is fading. The relative strength index (RSI) slipped to around 44, falling below the neutral level of 50 and indicating weakening buying strength.
Meanwhile, the Moving Average Convergence Divergence (MACD) has moved below its signal line while the negative histogram continues to expand, signaling that bearish momentum is building.
Together, these indicators indicate a shift from neutral market conditions to a more pronounced downtrend.
For buyers to take back control, $HYPE must reclaim the broken trendline and move back towards the previous high of $75.58, which now serves as the main resistance level.
On the other hand, the 50-day EMA at $63.13 remains the most important support.
A sustained move below this level could pave the way for a deeper correction towards $53.71, while continued inflows into institutional ETFs could help support the asset in the long term despite near-term selling pressure.