HYPE Price Prediction: Is $40 the Lifeline for Bulls and Bears? Short Positions May Face Short Squeeze Risk

A newly created encryption wallet has attracted market attention by depositing $1 million USDC into HyperLiquid (HYPE) and purchasing over 25,500 HYPE Tokens. This move is particularly noteworthy as it comes amid a big dump in HYPE prices and a sharp downturn in market sentiment.

According to Gate's market data, as of July 9, HYPE has rebounded above $39, currently reported at $39.228, with a 24-hour increase of 3.7%. Despite a previous wave of correction, such large-scale buying activity (million-dollar bottom fishing) suggests that there may be strong conviction behind it. This action took place during a period of increased volatility in the cryptocurrency market and liquidation peaks, forcing traders to reassess HYPE's short-term trend expectations in a fragile market structure.

😨 Why has trader confidence collapsed? HYPE market sentiment has plummeted to freezing point

The positive market sentiment index around HYPE has fallen sharply to 18.02—the lowest level in over two months. This plummeting reflects a widespread sense of anxiety across the entire encryption market, as traders weigh the impact of the recent price big dump and increasing volatility. Historical data shows that such sentiment crashes can either signal a buying rebound or lead to further panic selling (cascading).

Although panic sentiment (FUD) dominates the market, contrarian investors may interpret this sentiment low as a potential rebound opportunity—provided the market stabilizes in the short term.

🚨 Long liquidations surge: Dangerous signal or market reset opportunity?

As of the writing of this article, the long liquidation amount of HYPE has exceeded $932,000, far above the $43,000 short liquidation amount. This severe imbalance reveals a harsh reality: most traders previously held bullish (long) positions, but were brutally liquidated when the price fell below the key support level.

The HyperLiquid platform alone contributed $561,000 in liquidation amount, highlighting the painful cost of high leverage trading during this big dump. Although these aggressive liquidations are painful, they may also signify a market reset (washout), clearing out weak hands and high leverage positions, laying the groundwork for a healthier price trend going forward — provided that selling pressure does not escalate further.

📉 HYPE falls below key support! Is the upward trend declared over?

HYPE has recently attempted multiple times to recover the key resistance range of 40-43 USD but failed and ultimately fell below the support line of its rising channel. This technical breakdown has damaged its previous bullish structure, indicating that bearish momentum is strengthening. If weakness persists, the key downward target now points to 36.86 USD, and it may even drop to 30.86 USD.

In addition, the Stochastic RSI has started to turn downwards, reinforcing the short-term downside risk. For the Bulls, it is crucial to quickly reclaim and hold the $40 level, which will be key to negating the emerging bearish pattern and restoring the upward trend.

⚔️ Is 40 USD the line of life and death for long and short positions? Short sellers may face a short squeeze risk

According to the GateLiquidation Heatmap analysis, the short liquidation concentrated area is still heavily accumulated in the $40 to $42 range, which lays the groundwork for a potential counterattack.

If bullish power can push the HYPE price back above 40 USD, short positions may begin to massively close out, triggering a short squeeze market. However, the current price of 38.22 USD remains below this key area, which means bulls must show decisive strength.

Before this, shorts still controlled the situation. The short pressure accumulated near the $40 resistance level could either become fuel for an upward breakout (short squeeze) or a heavy anchor for further downward movement (suppressing the rebound).

🔮 Summary: Panic, liquidation, and complex games under breakdown, with 40 USD as the key battlefield

Recently, the million-dollar HYPE whale buying the dip, coupled with market sentiment collapse, massive long liquidation, and break of the rising trend support level, paints a complicated picture of the market.

Despite the pervasive fear, uncertainty, and doubt (FUD) and weak price trends, the dense short liquidation zone above $40 provides technical conditions for a potential oversold rebound. Traders should closely monitor the outcome of the contest at $36.86 (key support) and $40 (key resistance/short liquidation zone):

• If it loses the support at 36.86 USD, it may trigger a deeper fall (bottoming out).
• If it can strongly recover and stabilize at the $40 level, it may trigger a massive short squeeze, thereby reversing the current downtrend and creating opportunities for HYPE to regain upward momentum.
• (Source: AMBCrypto)