Hyperliquid Price Sees ‘Buy the Rumor, Sell the News’ Effect: Is $24 Next?

Key Insights

• Hyperliquid crypto rose by more than 20% following news it will support prediction markets trading under HIP-4.
• HYPE token price dropped by 23%, bringing about the ‘buy the rumor, sell the news’ effect. Or was this just a drag down by the slumping crypto markets?
• For HYPE token, $24.3 was next if the price deviated under the $28.5 level. Still, there was a possibility to fall to $22.

The crypto market does not cease to shock participants. Just when positive news began to attract gains and trader preference, an unexpected reversal occurred. This was the case for Hyperliquid’s native token, HYPE, this week.

In the past 24 hours, Hyperliquid crypto was declining at an alarming rate. This caught the community’s attention, which was on the verge of becoming bullish. Little did they know, things in crypto change very fast. But how did it play out?

Recap of Hyperliquid Crypto Rally After News of Prediction Markets Trading

On February 3rd, the Hyperliquid crypto team announced that HIP-4 would support prediction market trading. This news sparked a big rise in HYPE token. As a result, the price went up more than 20%, slightly surpassing the $37 level.

For context, HIP-4 offers fully secured outcome contracts that settle in fixed ranges without using leverage. This gets rid of the risks of liquidation. Hence, it made prediction markets and options-like tools work well.

Initial HYPE token pump after the news | Source: CoinGecko

At first, investors showed a lot of interest, sparking discussions. Overall, the development reflected the steps the Hyperliquid team was taking, which increased its chances of growth.

However, the state of the market caused later drops. This summary showed the short-term but immediate effect on the price of HYPE. But was this claim entirely true?

Is HYPE Token Experiencing the ‘Buy the Rumor, Sell the News’ Effect?

On-chain analysis tools were quick to note the shift in sentiment. Following the initial shoot-up, there was a sharp correction shortly thereafter. As a result, Hyperliquid crypto’s market cap dropped by 23%. This reduction was even more than its initial gain.

As per Santiment, the sudden crash brought about the idea that HYPE token might have suffered the “buy the rumor, sell the news” effect.

This sequence suggested that investors bought in hopes of making money, which they did. Then, they sold for profit-taking or when they realized they weren’t going to make money. So, taking profits puts pressure on prices to go down.

On the other hand, the drop may have been worse because the whole crypto market was going down. Bitcoin and other major assets have experienced similar corrections.

Still, the timing played a big role in the news event. So, it seemed clear that selling after the initial pump during events was a good idea.

In general, HYPE probably went through a mix of both things. This showed how the sector usually reacts to news. So, the situation has both positive and negative effects on HYPE. But what was the price action saying?

Hyperliquid Crypto Price Prediction: Is HYPE Token Now Headed Below $24?

The charts echoed the ongoing price crash of HYPE token. The price of Hyperliquid crypto was trading around $29, but going below $28.5 would see it revisit $24.3 as the next target. The chart showed that the price was trading just below the resistance zone at $28.64.

If the price dropped below $28.50, it would hit the 0.786 retracement level near $24.35. This demand zone lined up with the volume gap and imbalance. If things got worse, losses could reach $22.00, where there was a previous consolidation that formed a base.

Conversely, staying above $28.50 could bring back buyers looking to get back to $29 and maybe even past $30. Above that, the liquidity was around $34. So, sellers take control below $28.50, and buyers only get back on track when the price stays above $29 with strong continuation.

The post Hyperliquid Price Sees ‘Buy the Rumor, Sell the News’ Effect: Is $24 Next? appeared first on The Market Periodical.