Hyperliquid [HYPE] has extended its losses to 22% from its July peak of $73, effectively breaking a key trendline as analysts adopt a more defensive posture. The token has declined to approximately $57 amid mounting selling pressure from multiple fronts. Hyperliquid is a decentralized perpetual futures exchange operating on its own appchain, Layer 1 blockchain, with HYPE functioning as the ecosystem's staking and governance token — meaning its value is closely tied to platform trading activity and the protocol's revenue-backed buyback mechanism.

According to crypto analyst Michael Van de Poppe, the trendline breakdown warrants caution. He stated on X:

$HYPE has lost the uptrend unfortunately, which means that I'm going to be more passive on a potential trade. Last time this occurred, price fell from €50 to €15. (Source)

Van de Poppe indicated a preference for gradually scaling into a position if the pullback deepens, akin to a dollar-cost averaging (DCA) approach where small amounts are allocated periodically.

Trader and analyst Dylan Loomer, known as Trader Mayne on X, echoed a similarly cautious stance, projecting a potential 38% pullback to the monthly demand zone near $35:

No idea if we get down to the monthly demand zone, but if we do, I think buying HYPE as low as you possibly can is a good idea. $35 would be a gift, but I'll start scaling in earlier than that.

Three Factors Driving HYPE Selling Pressure

During the first half of 2026, HYPE outperformed the broader market and became a favorite among traders, partly fueled by the early West Asia crisis. However, several bullish catalysts have weakened in the second half of the year.

1. Fading Institutional ETF Demand

The institutional demand from U.S. Spot HYPE ETFs that fueled June's explosive rally to a new all-time high has faded in July. Since mid-July, the products have recorded outflows for the longest sustained period since their debut, bleeding an average of $1 million per day (approximately 20K HYPE) since July 10th. The reversal marks a notable shift from the spot ETF inflows that had previously distinguished HYPE from many other tokens lacking comparable regulated investment vehicles.

2. Venture Capital Sell-Offs

Venture firms including a16z and Multicoin Capital have further intensified institutional sell-offs. Multicoin Capital unstaked $120 million worth of HYPE this week, adding to the downward pressure. Such VC distributions are a common feature of token unlock schedules, where early backers gain the ability to liquidate positions after designated lock-up periods expire.

3. Declining Buyback Pace

Trading activity on the Hyperliquid platform has slowed since June, cutting weekly revenue by approximately 3x — from an average of $21 million to $7 million. This reduction has correspondingly slowed the pace of HYPE buybacks by 3x, declining from 318K HYPE in early June to 108K tokens in late July. On a daily average, buybacks amount to roughly 20K HYPE, which in theory should be sufficient to absorb the ETF sell pressure. Because Hyperliquid directs a portion of trading fees toward repurchasing HYPE on the open market, the buyback program effectively links the token's demand floor to exchange usage volumes.

Smart Money Positions Against Recovery

Smart money net positioning has turned negative, with over $150 million betting against HYPE's recovery. The token appears to be reacting to the Multicoin Capital sell-off news alongside broader market sentiment.

Overall, traders are actively shorting HYPE amid declining buybacks and sustained sell-offs from ETF and venture capital firms. However, some analysts maintain that deeper corrections could present discounted buying opportunities for those with a longer-term outlook.