Hyperliquid (HYPE) Suffers Intense Selling Pressure After JELLY Meme Coin Short Squeeze

Hyperliquid (HYPE) is experiencing intense selling pressure after a massive short squeeze on the JELLY meme coin sparked concerns among traders.

Hyperliquid (HYPE) is facing selling pressure after a massive short squeeze on the JELLY meme coin sparked concerns among traders.

What Happened: A whale with 124.6 million JELLY tokens manipulated the token’s price and exploited Hyperliquidity Provider (HLP) for huge gains.

The whale initially dumped its holdings, crashing JELLY’s price and putting Hyperliquid in a huge passive short. Then, by buying back and pumping the price, the whale inflicted nearly $12 million in losses on Hyperliquid.

This incident raised concerns about Hyperliquid’s risk management and security protocols. To mitigate further damage, the platform decided to delist JELLY.

The move was intended to prevent what could have escalated into an astounding $230 million loss.

Despite this action, investor confidence took a hit. As a result, HYPE’s price slid by 14% over the last 24 hours, slipping below $5 billion in market capitalization.

Why It Matters: Hyperliquid is facing scrutiny for the handling of the incident.

The Relative Strength Index on HYPE dropped sharply to 36.27 compared to 71 two days ago, highlighting the rapid loss of momentum following the exploit news.

The RSI, which measures price momentum on a scale of 0 to 100, typically signals overbought conditions above 70 and oversold territory below 30. Readings between 30 and 50 indicate bearish pressure.

At 36.27, HYPE is nearing oversold levels, suggesting sellers have taken control. While not yet in extreme territory, the weakness signals potential for further downside unless sentiment improves.

Meanwhile, the BBTrend indicator fell from 10 to 6.97 since the exploit but remained positive for six days. BBTrend, which tracks trend strength based on Bollinger Band expansion, reflects market momentum. Values above 3 indicate strong trends, while readings below 1 suggest consolidation.

If BBTrend continues to decline, it could confirm a slowdown in bullish momentum. Combined with low RSI, this scenario may keep HYPE under selling pressure unless a significant reversal occurs.

If the current downtrend persists, HYPE is on track to test the critical support level at $13.91. Technical indicators suggest a potential death cross formation, where the short-term moving average crosses below the long-term moving average, signaling further downside risk.

A breakdown below $13.91 could trigger additional selling pressure, with the next key support levels at $12.82 and $12.06. Falling below these zones may accelerate the bearish momentum, deepening the decline.

However, if Hyperliquid manages to recover, it could make another attempt at the $17.03 resistance. The token struggled to break above this level three days ago.

A successful breakout above $17.03, supported by strong momentum, could pave the open the way for a rally toward $21 and possibly $25.87. This scenario would mark HYPE’s first time trading above $24 since February 22.