HYPE Whales Trapped in Liquidation Channel as Bears Seize Control

Hyperliquid’s price action tells a story of pain for long traders. The altcoin, which touched $59.40 at its peak, has been caught in a relentless bearish liquidation channel. As of now, HYPE trades at $24.48, struggling to hold gains despite a marginal 0.15% daily uptick, while nursing a steeper 7.58% weekly decline. This prolonged weakness has transformed the market into a liquidation machine, with trapped positions unwinding at alarming speeds.

When Conviction Meets Catastrophe: The $22.5M Whale Saga

On-chain data reveals the brutal reality facing major players. According to Lookonchain, a significant whale holds a 5x leveraged long position that has spiraled into a staggering $22.5 million floating loss. This massive drawdown hasn’t forced a capitulation—the whale continues to grip its position despite liquidation lurking dangerously close at $20.66. Meanwhile, another whale engineered a 10x long bet on 207,497 HYPE tokens (initially worth $4.72M), with their liquidation threshold set at $13.68.

This refusal to exit, despite mounting losses, suggests these players believe in a reversal. However, conviction alone won’t stop the bleeding in a market overwhelmed by bearish momentum.

The Liquidation Cascade: $70M in Long Positions Wiped Out

The whale dilemma mirrors the broader market dysfunction. CoinGlass data exposed a jaw-dropping reality: between December 18-19, liquidations in the long direction exploded to over $70 million, while shorts faced a pittance of $0.54 million in liquidation pressure.

This asymmetry reveals HYPE traders were collectively wrong, and the market has been punishing that crowded bullish positioning. With 50.81% of positions leaning long versus 49% short, the Long Short Ratio hit 1.03—barely favoring bulls, yet still enough to create cascading failures as positions get flushed.

Technical Picture: A Downtrend Without Relief

The technical setup screams bearish dominance. HYPE’s Relative Strength Index sits at 29—deep within oversold territory, yet the price keeps sliding. The altcoin languishes below both the 9-period and 21-period moving averages, with the 9-MA around $26 and 21-MA near $29 acting as resistance walls that bulls have failed to breach.

CryptoQuant’s Futures Average Order Size data showed Big Whale Orders maintained for two consecutive months, indicating sustained whale participation. But participation alone—whether aggressive longs or defensive hedges—cannot override the weight of liquidation selling.

What’s Next? The $20 Question

Current trajectory suggests HYPE could test the $22 support level and potentially break lower toward $20. If that happens, the whale sitting on a $22.5M loss would face liquidation, potentially creating a death spiral of forced selling.

A genuine reversal requires bulls to reclaim territory decisively. Breaking above the MA9 at $26 and pushing past MA21 at $29 would be prerequisites for any sustained upside. Until then, HYPE remains trapped in its liquidation channel, and whales remain trapped in their underwater positions.

The market waits to see if conviction outlasts losses—or if the liquidation cascade continues.