Wormhole’s cryptocurrency, W, has experienced a significant decline following a brief price surge triggered by the integration of HyperEVM into its ecosystem. While the addition promises greater inter-chain liquidity and developer engagement, bearish signals in technical analysis suggest a challenging outlook ahead.
HyperEVM Integration Expands Wormhole’s Capabilities
The launch of HyperEVM marks a pivotal development in Wormhole’s long-term ecosystem strategy. This integration enhances compatibility with the high-performance Hyperliquid blockchain, which can handle 200,000 orders per second and manage billions in daily transaction volume.
By incorporating HyperEVM, Wormhole enables access to inter-chain liquidity, allowing developers to deploy ERC-20 tokens and interact effectively with HyperCore’s deep order books. Users can now seamlessly transfer assets between HyperEVM and over 40 supported blockchains via the Wormhole portal, with developers able to facilitate token transfers in their applications using just a few lines of code through Wormhole Connect.
Short-lived Rally
The market’s initial reaction to the HyperEVM announcement was robust. On August 29, Wormhole surged by over 33% within hours, climbing from $0.079 to $0.106 as traders anticipated long-term gains from the new inter-chain transfer capabilities.
However, this enthusiasm proved fleeting. As Bitcoin slipped below $110,000, Wormhole lost momentum and slid towards the support zone around $0.08, with a significant amount of its intraday gains dissipating. A sharp rejection of resistance around the $0.085 mark highlighted the fragility of the rally.
Technical Analysis: Warning Signals Emerge
Price charts indicate that Wormhole (W) remains under considerable bearish pressure. Over the weekly period, the token has failed to break past key swing highs, with resistance at approximately $0.104 and support near $0.054. Since April, the token has reached new lows, positioning its market structure for more downward movement.
The daily chart reveals a trading range between $0.071 and $0.098. Increased volatility has led momentum indicators to signal a bearish trend. The Chaikin Money Flow (CMF) shows a negative figure of -0.21, suggesting ongoing capital outflows from the market. Additionally, the Awesome Oscillator indicates weak bearish momentum, while the stochastic RSI approaches overbought conditions, signaling a potential for further declines.
Short-term action appears cautious as Wormhole (W) remains above the $0.08 order block, a level that previously supported its rally. If this support fails, a decline towards the lower end of the trading range near $0.071 becomes increasingly likely.
Derivatives Market Shows Diverging Views
Data from Coinglass reveals an interesting split between retail traders and institutional players. Overall trading volume in W’s derivatives has plunged by 48% to $532 million, despite a slight increase in open interest to $75 million.
The global long/short ratio is currently below parity at 0.95, indicating a slight bearish bias. However, both Binance and OKX show a distinct trend towards long positions, with retail traders heavily betting on a market rebound. In contrast, institutional positions are nearly balanced, suggesting more of a hedging strategy than conviction in price recovery.
This divergence leaves retail long positions vulnerable in the face of a broader bearish trend.
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