The Tigers moved for the winger as they look to strengthen their attacking options, but Watford have shown no willingness to sell at that price.
Irankunda, 20, is currently on international duty at the World Cup with Australia.
He opened the scoring for his country in their group-stage match against Turkey, a goal that has only added to his growing reputation.
The winger was signed by Watford last summer from Bayern Munich for a fee of £2.5m.
He has four years remaining on the contract he signed at the time of that move, giving Watford little urgency to sell this summer, reports the Daily Mail.
Bayern Munich retain a significant interest in any future transfer, having inserted both a 50 per cent sell-on clause and a buyback clause into the original deal.
Those conditions mean any departure from Watford would also need to satisfy Bayern's contractual position before a deal could be completed.
Hull's opening offer falling well short of Watford's valuation suggests further bids may be required if the Championship club wish to press ahead with their interest.
Irankunda's World Cup exploits with Australia are likely to keep his value high, with his performances in the tournament continuing to attract attention from elsewhere.
For now, Watford's stance leaves Hull needing to reassess their approach if they want to land the forward this summer.