Hyperliquid (HYPE) has drawn increasing attention in recent weeks as traders debate whether the token is primed for another bearish leg or if its current levels represent a long-term buying opportunity. After surging toward the upper boundary of its trading range in mid-August, HYPE faced strong rejection near $50 and has since declined by roughly 16%, leaving short sellers in profit.

With price action now hovering around key mid-range levels, the market presents a blend of opportunities: traders looking to capitalize on short-term volatility see room for further downside, while long-term investors point to valuation metrics suggesting potential undervaluation.

The Trading Range: From Opportunity to Caution

Throughout the third quarter, HYPE has largely moved within a defined range between $36 and $50. This consolidation zone has offered lucrative swing trading opportunities for those adept at identifying reversals near the extremes.

In mid-August, when HYPE reached the $50 resistance area, bearish traders seized the opportunity, triggering a pullback that pushed the price below $42. That retracement has already rewarded shorts with double-digit returns, but technical indicators suggest there could be more downside to come.

If HYPE continues its decline, the next significant level to watch is the range low near $36. A move toward this support could deliver another 16% profit for short sellers entering around current prices.

Technical Indicators Favor the Bears

A look at HYPE’s 4-hour chart highlights the challenges facing bulls. The Relative Strength Index (RSI) has retreated from overbought territory, signaling waning momentum. The On-Balance Volume (OBV) indicator has also weakened, confirming declining buying pressure.

Adding to this bearish backdrop, the price has slipped decisively below the mid-range level of $42. If HYPE closes multiple daily candles beneath this threshold, it would further validate the bearish thesis, opening the door for a test of the $36 zone.

Liquidity data supports this scenario. Heatmaps indicate strong liquidity pools around $40 and $37.3, levels that could act as magnets for price. On the upside, liquidity concentrations remain at $45 and $50, meaning any bullish rebound would first need to overcome significant resistance.

Macro Context Could Add Pressure

Traders are also closely watching macroeconomic developments. Federal Reserve Chair Jerome Powell’s upcoming remarks at the Jackson Hole Symposium could influence risk assets across the board. If Powell adopts a hawkish stance, it could dampen risk appetite, adding additional selling pressure on volatile altcoins like HYPE.

In such an environment, short positions would likely benefit from accelerated downward momentum, particularly if liquidity sweeps occur at lower support levels.

Long-Term Perspective: Is HYPE Undervalued?

While short-term technicals favor the bears, some analysts argue that HYPE may actually be undervalued from a fundamental perspective. One key metric, the Supply Weighted Profit to Earnings (SWPE) ratio, currently sits at 3.19. This measure compares HYPE’s market capitalization to its protocol earnings, which also fund the project’s buyback program.

Lower SWPE readings are generally considered a signal of undervaluation, suggesting that the token’s market price does not fully reflect its earnings potential. For long-term investors, this could present an attractive entry point, even as short-term traders position for further downside.

In essence, while technical analysis points to additional bearish potential, fundamentals hint at strength beneath the surface. This dual narrative is what makes HYPE one of the most debated tokens at the moment.

Strategic Outlook: Two Paths for Traders

The market currently offers two diverging strategies:

• Short-Term Bearish Play: Traders focused on short-term charts may continue to favor short positions as long as HYPE remains below $42. Targets around $40 and $36 could provide profitable exits if bearish momentum persists.
• Long-Term Accumulation: Investors with a longer horizon might view current levels as a discounted buying opportunity. With protocol earnings supporting ongoing buybacks, HYPE could eventually recover and extend beyond its current trading range.

The challenge lies in timing. Entering too early on the long side risks further drawdown, while short sellers must remain vigilant to avoid being caught in sharp rebounds that invalidate their thesis.

A Market Defined by Contradictions

Hyperliquid’s current price structure reflects the broader nature of cryptocurrency markets — volatile, contradictory, and filled with opportunity. On one side, technical signals and liquidity maps suggest further downside, potentially rewarding short sellers with another leg of profits. On the other, valuation metrics hint at undervaluation, presenting long-term investors with a possible accumulation window.

The outcome will depend not only on HYPE’s technical resilience but also on macroeconomic conditions and the overall sentiment in the altcoin sector. For now, traders and investors alike should prepare for heightened volatility and adapt strategies accordingly.