Hyperliquid (HYPE) extended its sharp correction this week, falling to $24.71 on December 18, as traders closely monitor multiple support zones between $20 and $23.86. Despite the pullback, on-chain data reveals that large investors are quietly positioning for a potential rebound, deploying more than $37 million in stablecoins to accumulate HYPE at lower prices.
The decline comes amid heightened debate around Hyperliquid’s supply mechanics, including an ongoing validator vote to formalize the burn of roughly $1 billion worth of HYPE tokens via the protocol’s Assistance Fund (AF).
Technical Analysts Identify Four Key Support Zones
As HYPE searches for a bottom, several prominent traders have outlined potential levels where price stabilization or a bounce could occur.
Crypto trader Altcoin Sherpa highlighted two possible trading strategies. The first involves a short-term scalp long from current levels, targeting a rebound toward $27–$28. The second focuses on a swing long setup in the $23–$20 range, an area he noted contains heavy liquidation clusters. According to Sherpa, the recent sell-off appears inefficient, and historical price action suggests a bounce could follow once Bitcoin stabilizes.
He also referenced HYPE’s previous bottoming structure near $9, which took weeks of consolidation before the next major rally. Based on that pattern, Sherpa expects a similar accumulation phase to unfold before Hyperliquid’s next directional move.
Meanwhile, Trader Nigma published a chart projecting downside risk toward $21.45, marking it as a potential reversal zone. Although no commentary accompanied the chart, the descending support levels suggest traders are preparing for further volatility.
TraderSZ identified $23.86 as an immediate support level, warning that failure to hold above it could open the door to deeper losses. Adding to the bearish technical outlook, Trader Nebraskangooner pointed to a head-and-shoulders pattern, with a neckline breakdown projecting a measured move toward $20, a key psychological level.
Hyperliquid Tokenomics Add Supply Pressure
Beyond technicals, HYPE’s price action is being shaped by evolving supply dynamics. Validators are currently voting on a proposal running through December 24 that would formally burn 37 million HYPE tokens held in the Assistance Fund, effectively removing them from circulation.
The AF mechanism channels 99% of trading fees into token buybacks, sending purchased HYPE to an inaccessible system address. With Hyperliquid generating approximately $874 million in fees year-to-date, the Assistance Fund has grown to nearly $1 billion at recent prices.
While the burn represents an estimated 10%–13% of circulating supply, the market reaction has been muted. Analysts suggest traders already priced in the burn, viewing it as accounting clarity rather than a fresh scarcity catalyst.
The more significant headwind comes from contributor token unlocks, which begin vesting in November 2025 and continue through late 2027. Roughly 237 million HYPE will enter circulation over 24 months—around 10 million tokens per month.
Early unlock activity has already impacted price action. On-chain data shows that initial tranches released in November were partially sold OTC, contributing to a 17% drop below $30 shortly after those transactions occurred. The next scheduled unlock on December 29 is now firmly on traders’ radar.
Whale Accumulation Emerges Near Support Levels
Despite near-term uncertainty, whale activity suggests growing confidence at lower price ranges. On-chain tracker Lookonchain reported three major stablecoin deposits on December 17, totaling $37.1 million, all linked to potential HYPE accumulation.
One wallet, 0x5Ae4, transferred $20 million USDC to Hyperliquid and placed limit buy orders as low as $15, indicating expectations for deeper downside before aggressive accumulation.
Another address, 0xE867, deposited $10 million USDC while already holding 926,488 HYPE (worth roughly $22.4 million), signaling long-term conviction despite short-term volatility.
A third wallet, 0x23Af, added $7.1 million USDC and purchased 277,420 HYPE at an average price of $25.60, showing willingness to buy even above current market levels.
Collectively, whale positioning is concentrated between $20 and $26, closely aligning with the technical support zones identified by traders.
What’s Next for HYPE Price?
At $24.71, HYPE trades nearly 60% below its all-time high, with analysts warning of an additional 20%–30% downside if price revisits the $20–$23 range. The market now faces competing forces: steady monthly token unlocks expanding supply, while protocol buybacks and the AF burn permanently reduce circulating tokens.
Whether Hyperliquid can establish a durable base depends on how price reacts at these critical support levels—and whether whale accumulation is enough to absorb upcoming supply. For now, traders remain focused on structure, liquidity zones, and the evolving tokenomics that will shape HYPE’s trajectory into 2026 and beyond.
Conclusion
Hyperliquid’s sharp pullback to $24 highlights a market caught between supply expansion from token unlocks and long-term scarcity driven by protocol buybacks. While technical indicators suggest further downside risk toward the $20–$23 zone, aggressive whale accumulation near these levels signals growing institutional interest.
As the Assistance Fund burn vote and upcoming unlock events approach, HYPE price action is likely to remain volatile. Traders and investors should closely monitor on-chain flows, support reactions, and broader market conditions to assess whether Hyperliquid can establish a sustainable base.
FAQs
Why did Hyperliquid (HYPE) price drop to $24?
Hyperliquid declined to $24 due to broader market weakness, technical breakdowns, and concerns over upcoming contributor token unlocks despite a proposed Assistance Fund burn.
What are the key support levels for HYPE price?
Technical analysts have identified major support zones between $20 and $23.86, with $21.45 and $20 acting as critical downside targets if selling pressure continues.
Are whales buying Hyperliquid (HYPE)?
Yes. On-chain data shows whales deposited $37.1 million in stablecoins to accumulate HYPE during the correction, signaling long-term confidence at lower price levels.
What is the Hyperliquid Assistance Fund (AF) burn?
The Assistance Fund converts 99% of trading fees into token buybacks. A validator vote aims to formally burn 37 million HYPE tokens, removing them permanently from circulation.
Will contributor token unlocks impact HYPE price?
Yes. Around 237 million HYPE tokens will vest between 2025 and 2027, adding steady supply pressure that could limit upside in the near term.
Can HYPE price bounce from current levels?
Analysts believe a bounce is possible if HYPE holds above the $20–$23 support zone, especially if Bitcoin stabilizes and whale accumulation absorbs selling pressure.
