The right-hand side of the equation was easier to differentiate wrt $x$ in which I got:
$4x-4y(\frac{dy}{dx})$
However, that was not the case for the left-hand side.
The main reason is the term is inside the square, so I cannot directly take its derivative. Expanding it was one option, however, this is only useful for low exponents. Is there a much more simpler way to differentiate the left-hand side?

From $(x^2 + y^2)^2 = 2(x^2 -y^2)$,
we have: $2(x^2 + y^2)(2x + 2yy') = 4(x - yy')$
Then: $(x^2 + y^2)(x + yy') = x - yy'$
$\Rightarrow$ $x(x^2 + y^2) + yy'(x^2 + y^2) = x - yy'$
$\Rightarrow$ $x(x^2 + y^2 - 1) = - yy'(x^2 + y^2 + 1)$
$\Rightarrow$ $y' = \dfrac{x(x^2 + y^2 - 1)}{- y(x^2 + y^2 + 1)}$
Therefore, $\dfrac{dy}{dx} = y' = \dfrac{x(x^2 + y^2 - 1)}{- y(x^2 + y^2 + 1)}$