Hyperliquid finds support at $35.00 as DeFi TVL surges 80% in three months

• Hyperliquid resumes gains after three days of losses, targeting $40.00 after rebounding from $35.00 support.
• HYPE's DeFi TVL reached an average of $1.77 billion on Friday, marking an 80% increase over the past three months.
• Hyperliquid is on the verge of a technical breakout, targeting 24% increase to its all-time high.

Hyperliquid (HYPE) breaks a streak of three consecutive days of losses on Friday, up almost 3% to trade at around $36.82 at the time of writing. The high-performance Layer-1 blockchain token is attempting a trend reversal, following a 23% decline from its all-time high of $45.71 reached on June 16. Support tested at $35.34 has paved the way for the current push toward the critical resistance at $40.00 and, potentially, the all-time high.

Hyperliquid DeFi TVL growth signals investor confidence 

Interest in Hyperliquid has steadily increased over the past three months, buoyed by the HYPE's price rally to all-time highs. According to DeFiLlama, the Decentralized Finance (DeFi) Total Value Locked (TVL), which represents the total value of all coins held in smart contracts linked to protocols on the chain, stood at around $1.77 billion on Friday. 

The uptrend over the past three months, since April 1, has led to an 80% increase in the TVL from approximately $353 million. This suggests that user confidence and trust in the token and the ecosystem are growing, evidenced by the surge in deposits and staking. 

Hyperliquid DeFi TVL data | Source: DeFiLlama

A higher TVL figure reflects adequate liquidity in the protocol's DeFi platforms, encompassing lending, borrowing, and trading. In general, Hyperliquid boasts a positive sentiment backed by token holders and platform adoption. 

At the same time, a higher TVL volume predisposes HYPE to price increases amid reduced sell-side pressure because users lock their holdings in smart contracts.

However, investors may need to temper their expectations based on the downward trend in HYPE futures contracts' Open Interest (OI). CoinGlass data shows that OI averaged $1.66 billion on Friday after peaking at around $1.98 billion on June 17. 

Open Interest refers to the US Dollar (USD) of all futures and options contracts that have yet to be settled or closed. A persistent decline indicates that traders are losing interest in HYPE and are unlikely to be betting on price increases in the short term. 

Hyperliquid Open Interest data | Source: CoinGlass

If volume drops in tandem, trading activity will slow down, possibly limiting bullish momentum and leaving Hyperliquid vulnerable to a decline.

Technical outlook: Hyperliquid attempts recovery, but bearish signals persist 

Hyperliquid's price is printing a green candle on Friday after securing technical support at around $35.34. A breakout toward the $40.00 key hurdle will likely follow if bulls rise above a confluence resistance at around $37.14, where the 100-period Exponential Moving Average (EMA) and the 50-period EMA converge with the upper boundary of the descending channel on the 4-hour chart.

The Relative Strength Index (RSI) hovers slightly above the midline, indicating mild bullish momentum. Traders should monitor the market for continued movement toward overbought territory to assess the strength of the uptrend.

HYPE/USD 4-hour chart

Still, the Moving Average Convergence Divergence (MACD) indicator sustains a sell signal that was flashed on Thursday, which could dilute bullish momentum.