Hyperliquid’s TVL Drop Reflects Waning User Participation, HYPE Token Poised for a Further Fall

Layer-1 blockchain Hyperliquid, known for its decentralized derivatives exchange, has noted a drop in its Total Value Locked (TVL) since the beginning of the year

Layer-1 blockchain Hyperliquid, which is known for its decentralized derivatives exchange, has seen a drop in its Total Value Locked (TVL) this year, despite a slight overall increase in decentralized finance (DeFi) TVL in the market since January 1.

This downturn in TVL has led to a decrease in demand for Hyperliquid’s native token, HYPE, with waning buying pressure setting the altcoin up for a further fall.

Hyperliquid’s TVL Drops 20%

Hyperliquid’s TVL has fallen by 20% since the beginning of the year, according to data from DefiLlama. As of writing, it sits at $1.89 billion, its lowest level since January 1.

This decline comes despite the general uptick in DeFi TVL in the broader market. According to the on-chain data provider, the crypto market’s DeFi TVL currently 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, which is reflected in the steady drop in Hyperliquid’s trading volume. According to DefiLlama, this has decreased by 19% over the past week.

The HYPE Token Reacts

A decline in a protocol’s TVL indicates lower capital invested or staked within the platform, which is reflected in the value of its native token. This is because a protocol’s native token is used to pay for gas fees, governance participation, and other activities on the platform.

When a protocol’s TVL drops, it can lead to a decrease in the value of its native token. This is because a protocol's native token is used to pay for gas fees, governance participation, and other activities on the platform.

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 indicating strong selling pressure at 35.72 RSI.

Furthermore, the HYPE token price continues to trade below the red line of its Super Trend indicator, which tracks the direction and strength of its 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 hints at a potential price drop.

HYPE Price Prediction: What To Expect?

HYPE currently trades at $22.18. If selling pressure persists, the token’s price could plunge below $20 to exchange hands at $17.34.

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