Hyperliquid (HYPE) continues to draw bullish attention from crypto investors, particularly from venture capitalists. Ryan Watkins, a partner at Synacracy Capital, recently argued that HYPE is currently undervalued when compared to Ethereum (ETH) and Solana (SOL), two of the largest and most established cryptocurrencies in the market. According to Watkins, Hyperliquid, a decentralized exchange (DEX) and Layer 1 blockchain, holds over 60% of the decentralized derivatives market, yet its valuation does not reflect its dominant position.

Watkins emphasized that Hyperliquid is one of the highest-earning blockchains, with annualized fees of $577 million, slightly above Tron (TRX). This places Hyperliquid among the top three chains in terms of fees, alongside Ethereum and Solana. Yet, despite its strong earning power and market share, HYPE is trading at a significantly lower multiple compared to these leading cryptocurrencies. Watkins believes this discrepancy signals that the token is undervalued, presenting an attractive opportunity for investors.

In addition to its current market position, Watkins highlighted Hyperliquid’s rapid growth since late 2024, particularly in the perpetual market. The platform has gained a substantial share of this market, positioning itself as a potential competitor to centralized exchanges like Binance. This growth has been fueled by Hyperliquid’s strong earnings, which have allowed the project to execute a buyback program. According to Watkins, the buybacks have created strong incentives for holders to retain their tokens rather than selling them immediately, thereby generating significant buying pressure for HYPE.

Despite the positive outlook, the current market conditions have not been in HYPE’s favor. As of the latest data, HYPE was trading at $17, a sharp decline from its December high of $35. This price drop is part of a broader market downturn, which has left many tokens facing substantial losses. The daily Relative Strength Index (RSI) for HYPE has remained below a neutral level since late February, signaling bearish market sentiment and relatively high selling pressure.

Given the current market conditions, some analysts believe HYPE could see further price declines in the short term. If the broader market sentiment continues to weaken, HYPE may test support levels around $12 to $14, with the possibility of dropping to $10. These levels are seen as critical points for the token, as they represent a bullish order block that could potentially provide a rebound if the market stabilizes.

However, Watkins and other bullish analysts remain optimistic about HYPE’s long-term prospects. If the price of HYPE were to rise above $20, it could signal a shift in market structure, potentially triggering a surge of bullish activity. A break above this level would likely attract more buyers, as it would indicate that the token is on an upward trajectory.

Overall, while Hyperliquid is facing short-term challenges, its fundamentals remain strong. With a dominant position in the decentralized derivatives market, strong earnings, and a growing user base, HYPE holds significant potential. For investors with a longer-term outlook, the current pullback could be seen as an opportunity to buy into an undervalued token that could rival larger players like Ethereum and Solana in the future. The next few weeks will be crucial for determining whether HYPE can reclaim its upward momentum or if it will face further declines in the face of broader market uncertainty.