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HYPE price prediction: The financing Intrerest Rate turning negative and falling below 36 USD may collapse to 30 USD.
Hyperliquid (HYPE) price has come under pressure this week, hovering around $37.34 on October 16, with a decline of nearly 6% so far this week. Data from the derivatives market indicates an intensifying bearish sentiment, with open interest falling to $163.28 million, a new low since early September, while the interest rate has turned negative at -0.014%, indicating that shorts are paying for long positions.
Interest Rate turning negative indicates short positions dominate the market
(Source: Coinglass)
Hyperliquid's derivative product data clearly supports a bearish outlook. According to Coinglass's OI-weighted financing rate data, the number of traders betting on a further fall in HYPE prices has exceeded those anticipating a price increase in long positions. The indicator's reading on Thursday was -0.014%, having turned negative and nearing the levels seen during last week's significant price drop.
The financing interest rate mechanism is one of the core indicators of the perpetual contract market. When the financing interest rate is positive, long positions need to pay short positions, indicating a strong bullish sentiment in the market. Conversely, when the financing interest rate turns negative, short positions must pay long positions to maintain their holdings, which indicates a dominant bearish sentiment in the market towards HYPE. Currently, a negative financing interest rate of -0.014% means that traders shorting HYPE are willing to pay costs to maintain their short positions, demonstrating their strong confidence in a further decline.
This financing interest rate structure is significant in HYPE price forecasting. Historical data shows that when the financing interest rate remains negative and open contracts decline simultaneously, it often indicates that prices will enter a deeper adjustment phase. This is because the negative financing interest rate reflects not only short positions sentiment but also, more importantly, the willingness of long positions to exit. When new long positions decrease and short positions actively accumulate, the downward pressure on prices naturally increases.
The analysis of the combination of financing interest rates and open contracts provides a more complete market picture. If the financing interest rate is negative but open contracts increase, it may only be short-term hedging demand or speculative short positions. However, when both decrease simultaneously, it indicates a reduction in overall market participation, and investor confidence is waning, which often signals a trend reversal or an acceleration of the fall.
The new low of未平倉合約 reflects the collapse of investor confidence
(Source: Coinglass)
In addition to negative financing rates, the sharp decline in futures open interest further validates the bearish argument. On Thursday, HYPE's open interest fell to $163.28 million, reaching the lowest level since early September, reflecting a significant decrease in investor participation. Open interest refers to the total value of all unsettled futures contracts, and the decline in this indicator means that a large number of positions have been closed, indicating a downturn in market activity.
The decline in open contracts can be interpreted in two ways. The first is profit-taking, where long positions close their positions when prices rebound. The second is forced liquidation, where highly leveraged long positions are forced to close when prices fall. From HYPE's recent price trend, after finding support at $36.51 on Sunday, it rebounded 15% on Monday, but subsequently faced resistance at the 61.8% Fibonacci retracement level of $44.48, and on Wednesday, most of the gains were given back. This trend pattern suggests that the decline in open contracts is mainly due to a combination of profit-taking and stop-loss exits.
What is more concerning is that the drop in open interest has reached a new low since September during a phase when prices have not completely collapsed. Typically, a significant decrease in open interest should be accompanied by panic selling and a price crash, but the current HYPE price remains around $37. This divergence could indicate that the market is brewing larger fluctuations. Investors are pulling out of the derivatives market in advance, while spot prices have not fully reflected this pessimistic sentiment. Once the critical support level is broken, the spot market may experience a corrective decline.
HYPE price predictions must take into account the divergence between these derivatives and the spot market. When a large number of participants leave the derivatives market while the spot price only falls moderately, it often indicates two possibilities: either the market is about to bottom out (because panic has been released in advance), or there will be an accelerated decline (due to a lack of new buying support). Based on the current interest rate and technical patterns, the latter possibility is more likely.
36.51 USD Death Line Determines Short-Term Direction
On the technical front, Hyperliquid's price found support around the weekly line of $36.51 on Sunday and rebounded by 15% the next day. However, this rebound faced strong resistance at the 61.8% Fibonacci retracement level of $44.48, and the price retraced most of the gains on Wednesday. As of the time of writing on Thursday, the price of HYPE is hovering around $37.34, once again approaching the weekly support level of $36.51.
Why is 36.51 USD so critical? This price level is the intersection of multiple technical factors. Firstly, it serves as support at the weekly level, representing an important accumulation zone over a longer time period. Secondly, from the perspective of Fibonacci retracement, this position is close to key retracement levels of previous upward momentum. Thirdly, in terms of volume distribution, there has been significant historical trading near 36.51 USD, and these areas often provide support when prices pull back.
If HYPE continues to pull back and the daily closing price is below the weekly support level of $36.51, the price forecast path for HYPE will continue to pull back to the low of $30.92 on June 21. This means there is about a 17% downside potential from the current price. Such a decline is not impossible, as when key support levels are effectively broken, it often triggers stop-loss orders and panic selling, causing prices to accelerate downward until the next strong support area.
From the perspective of volume analysis, if it falls below $36.51 accompanied by increased volume, it will confirm the validity of the breakdown, and the subsequent downward momentum will be stronger. Conversely, if the volume shrinks when it breaks down, it may only be a technical breakdown or a false breakdown, and the price may quickly recover the lost ground. Traders should closely monitor the changes in trading volume when the breakdown occurs, as this will provide clearer directional guidance.
$30.92 is not an arbitrary target, but rather an objective analysis based on historical price structure. The low on June 21 represents the lowest level of prior adjustments, and in technical analysis, previous lows often become target levels for subsequent adjustments. Additionally, there may be a large number of limit buy orders around $30.92, and these potential buy orders will provide support when the price reaches that level.
Technical indicators are fully bearish with dual confirmation from RSI and MACD
(Source: Trading View)
The technical indicators on the daily chart further strengthen the bearish narrative. The Relative Strength Index (RSI) is currently at 37, indicating that bearish momentum is intensifying. The RSI is a momentum indicator that measures the speed and magnitude of price changes, with values ranging from 0 to 100. Typically, an RSI below 30 is considered an oversold area, while above 70 is deemed overbought. Although the current reading of 37 has not yet entered the oversold zone, it clearly shows that short positions are dominating.
It is also noteworthy that the RSI is descending from a high level and has not yet reached the oversold zone, which implies that the downward momentum still has room to continue. Many technical analysts look for rebound opportunities when the RSI enters the oversold zone, but the current level of 37 suggests that HYPE prices may have further room to drop before forming effective oversold rebound conditions.
The Moving Average Convergence Divergence (MACD) indicator provides another bearish signal. The MACD formed a bearish crossover on October 6, and this crossover remains valid, further supporting the bearish outlook. The MACD is a trend-following indicator consisting of the fast line (12-day EMA), the slow line (26-day EMA), and the histogram. When the fast line crosses down through the slow line from above, it forms a bearish crossover, typically indicating the beginning or continuation of a downtrend.
The sustained effectiveness of the bearish crossover in MACD is key. The crossover formed on October 6 has maintained for several weeks now, during which the price has rebounded but failed to reverse the bearish structure of the MACD, indicating a strong resilience of the downward trend. Only when the MACD fast line crosses above the slow line to form a golden crossover can the trend reversal be confirmed. Until then, every price rebound should be seen as an opportunity for high-level profit-taking, rather than a signal of trend reversal.
The dual bearish confirmation of RSI and MACD holds significant weight in HYPE price predictions. A single indicator may produce false signals, but when multiple different types of indicators (momentum indicators and trend indicators) point in the same direction simultaneously, the reliability of the signals is greatly enhanced. Currently, both clearly support the bearish view, providing technical support for further declines after breaking below $36.51.
Analysis of the Feasibility of the Rebound Scenario and the $45 Target
However, HYPE price predictions cannot only focus on downside risks; they must also assess the likelihood of a rebound. If HYPE finds support around the weekly level of $36.51 and recovers, it may continue its recovery momentum, reaching the 50-day Exponential Moving Average (EMA) of $45.29. This would represent a rebound potential of about 21% from the current price.
The 50-day EMA is one of the most commonly used mid-term trend indicators in technical analysis. When the price is above the 50-day EMA, it is typically seen as a mid-term upward trend, while the opposite indicates a downward trend. Currently, the HYPE price is below the 50-day EMA, indicating a bearish mid-term trend. To reverse this pattern, HYPE not only needs to hold the support at $36.51 but must also break through the resistance at the 50-day EMA of $45.29.
The triggering conditions for a rebound scenario include: the financing interest rate turning from negative to positive, indicating a warming of long positions sentiment; the open contracts stopping the fall and rising, reflecting a recovery in market participation; the daily closing price stabilizing above 36.51 USD, confirming the support is effective; and a breakout with volume above the Fibonacci resistance level of 44.48 USD. Only when these conditions are met one by one can the HYPE price forecast shift from bearish to neutral or even bullish.
However, under the current configuration of derivatives data and technical indicators, the likelihood of a rebound scenario is relatively low. Negative financing rates and record-low open contracts indicate a severe lack of market confidence, while the bearish structure of the RSI and MACD has yet to show any signs of reversal. Therefore, any rebound should be viewed as an opportunity to reduce holdings on the rise, rather than a signal to establish new long positions.