Hyperliquid’s TVL Drop Poised to Send HYPE Token Crashing Below $20

Layer-1 blockchain Hyperliquid, which hosts a decentralized derivatives exchange, has seen a decline in its Total Value Locked (TVL) since the beginning of the year. This downturn comes despite the slight overall increase in decentralized finance (DeFi) TVL across the market since January 1.

The TVL drop has resulted in a decrease in demand for Hyperliquid’s native token HYPE. With waning buying pressure, the altcoin is poised for a further fall.

Hyperliquid’s TVL Drops 20%

As per data from DefiLlama, Hyperliquid’s TVL has fallen by 20% since the beginning of the year. At the time of writing, it stands at $1.89 billion, which marks its lowest level since January 1.

This decline occurs despite the general uptick in DeFi TVL in the broader market. According to the on-chain data provider, the crypto market’s DeFi TVL now stands at $120 billion, indicating a 1% rise over the past seven days.

When a protocol’s TVL drops, it usually signifies lower user participation. This is reflected in the steady decrease in Hyperliquid’s trading volume, which has dropped by 19% over the past week, according to DefiLlama.

The HYPE Token Reacts

A decline in a protocol’s TVL indicates lower capital being invested or staked within the platform, which signifies lower user participation. This usually results in a decrease in the value of the native token, as diminished capital reduces the demand for the token.

This is evident with HYPE, which has seen its value drop by 10% over the past seven days. Its Relative Strength Index (RSI), measured on a four-hour chart, supports this trend, currently at 35.72. The RSI, which measures overbought or oversold market conditions, indicates strong selling pressure at this level.

Also, the HYPE token price continues to trade below the red line of its Super Trend indicator, which tracks the direction and strength of a trend. The indicator is displayed as a line on the price chart and changes color to signify the trend: green for an uptrend and red for a downtrend.

If an asset’s price is below the Super Trend line, it signals bearish momentum in the market and indicates a potential price decrease.

HYPE Price Prediction: What To Expect?

Currently, HYPE trades at $22.18. If selling pressure persists, the token’s price could drop below $20 to trade at $17.34.

On the other hand, a positive shift in market sentiment could push the HYPE token price to reach $31.04.