Hyperliquid price has broken out of a descending parallel channel pattern supported by demand from smart money investors.

According to data from crypto.news, Hyperliquid (HYPE) rallied for the fifth straight day, rising 17.5% since its Jan. 2 low to an intraday high of $28.2 earlier today, Jan. 7. Trading at $27.5 when writing, its gains extend to 26% when taken from its December low of $22.3.

Hyperliquid price rally was supported by an accumulation trend from smart money investors. 

According to data from Nansen, ‘Smart Money’ participants are doubling down on Hyperliquid. For instance, Maven 11 recently added 161.3K HYPE tokens, bringing the value of their total holdings to $4.5 million, while a16z crypto and Borderless Capital added another 42.3K tokens to their respective positions.

Such an accumulation trend from smart money could have encouraged retail investors to follow through with additional buying, further fueling upward momentum.

Another potential catalyst behind its rally is Hyperliquid’s aggressive buyback strategy. The protocol buys back tokens from the market using revenue generated by the protocol and burns tokens out of circulation. In late December, the protocol burned nearly $912 million worth of HYPE tokens.

When such burning events reduce circulation, it increases scarcity, which in turn tends to create additional demand for the related token.

Hyperliquid price analysis

Hyperliquid price has broken out of a multi-month descending parallel channel pattern formed on the daily chart. When such a pattern is confirmed, it suggests that buyers have strong control over the market and may continue to push prices higher.

Looking at technical indicators, they seem to present a bullish bias for the token, at least in the short term.

The Moving Average Convergence Divergence indicator showed a bullish crossover with growing green histograms, while the Chaikin Money Flow index showed a positive reading of 0.22. Together, they confirm that momentum and capital inflows are supporting the uptrend.

Hence, HYPE could most likely rebound to its Dec. 4 high of $35.8, which also aligns with the target calculated by adding the height of the channel above the level at which the breakout occurred. At press time, the target was nearly 30% above current price levels.