Hyperliquid [HYPE] TVL Shrunk From $636M to $230M

Hyperliquid [HYPE] saw its Total Value Locked (TVL) shrink from $636 million in the first week of March to $230 million a month later

Hyperliquid [HYPE]’s Total Value Locked (TVL) saw a significant decline, shrinking from $636 million in the first week of March to $230 million a month later, according to data from DefiLlama. This exodus of capital was partly due to how the platform handled the JELLY saga.

The platform's actions, saving its Hyperliquid Provider vault and wiping out its negative PNL that resulted from the manipulation of JELLY and a trader’s long liquidation which Hyperliquid inherited, sparked debate.

While the actions helped to salvage the situation in the short term, they raised questions about the legality and decentralization of Hyperliquid's actions.

This scenario unfolded as AAX exchange announced its withdrawal from the cryptocurrency market and Huobi Global faced difficulties in meeting the minimum withdrawal amount for USDT.

HYPE could see a short squeeze in the near term

Source: HYPE/USDT on TradingView

The trading volume of the platform remained fine and was under no immediate threat. This also meant the demand for HYPE was healthy. The token’s breakout above the descending channel a week ago has erased all the losses the token made after the 24th of March.

It was approaching the $17.15 resistance that marked the swing high before the descending channel. On the 12-hour chart, HYPE has had a bullish structure since climbing above the lower high at $12.

Therefore, the 1-day and lower timeframes have a bullish structure, and a move beyond $17.15 would signal another leg higher for Hyperliquid token prices. This outcome appeared likely if Bitcoin [BTC] held its nerve.

The A/D of HYPE made a new high, rising beyond the March highs. The RSI was also above 60 to signal strong upward momentum.

Source: Coinglass

The liquidation map showed that some short-term volatility was possible. The short liquidations overhead were higher leverage positions, and had a higher estimated liquidation leverage closer to the price.

In particular, the $17, $17.3, and $17.45 levels are short-term targets due to high leverage liquidations clustered in these areas.

Traders should be cautious of a false breakout past $17.15, driven by short liquidations, as it could reverse quickly. A retest of the $17 zone as a demand level could present a long opportunity for traders.

Monitoring BTC’s movement will be crucial to understanding market-wide sentiment and confirming potential price direction.