Hyperliquid: bad news for the crypto HYPE

Unfortunately for HYPE, the native crypto of the Hyperliquid ecosystem, there is no good news. In fact, there is one particular piece of news that could have negative consequences on its price.

The Negative News for the Price of HYPE (Hyperliquid)

Starting from November 29, a massive token unlock is scheduled. 

It should be noted that the maximum supply of HYPE is nearly one billion tokens, and so far less than 340 million have been put into circulation. 

Starting next week, as many as 238 million HYPE tokens will be unlocked, equivalent to 23.8% of the total supply. 

Fortunately, however, they will not be unlocked all at once, but linearly over a span of 24 months. The issue, however, is that it will still involve approximately 10 million tokens being unlocked each month, which is just over 200,000 per day.

With 340 million tokens currently in circulation, approximately 3% will be unlocked each month for the next two years, which could increase selling pressure for many months starting from December. 

Many analysts view this scenario as a bearish scenario with a significant price drop if the newly released tokens are not absorbed by buyback.

The Price of HYPE

HYPE landed on the crypto markets a year ago, at the end of November 2024. 

Initially, its price surged significantly, rising from $3.2 to $32 in just over three weeks. 

Subsequently, there was a significant correction, bringing it down to $10, but it was followed by a new rally. 

Thanks to that prolonged rally, which lasted for months, this September it recorded an all-time high close to $60, but starting from the second half of September, a long decline began. 

So far, the decline has lasted two months, bringing the price back below $32, but it may not be over yet. 

It is noteworthy that $32 was also the first peak reached at the end of 2024. 

The real issue is not just the current decline ongoing for two months, and probably not yet concluded, but the increase in selling pressure expected to begin in December with the unlocking of tokens, which could last for up to two years. 

It should be noted, however, that a buyback with burn is also planned. In fact, 97% of the fees from the Hyperliquid platform are used to repurchase and burn hype tokens.

The problem is that this buyback is already underway, and so far it has not managed to halt the decline of the past two months. 

Fortunately, for a couple of days now, Hyperliquid has activated the so-called Growth Mode, which reduces taker fees by 90% for new markets, theoretically generating higher trading volume, and thus more revenue for the platform and more buyback. 

At the protocol level, however, there do not seem to be any significant recent developments. 

Hyperliquid

Hyperliquid is the world’s leading decentralized exchange (DEX) for trading perpetual futures contracts (perp) on crypto prices. 

It has a TVL DeFi exceeding $4.3 billion, but before the sharp decline in crypto markets in November, it had surpassed $6 billion. 

It has a strong rival in Aster, which, however, has a significantly lower TVL (1.3 billion dollars). 

It is noteworthy that the most famous DEX in circulation, Uniswap, stops at 3.9 billion dollars, but this is probably due to the fact that Uniswap does not support perps. 

Perpetual contracts not only allow buying and selling, but more importantly, they enable opening leveraged long and short positions, and this is what has driven Hyperliquid’s success. 

Moreover, it is a DEX that is used in a manner similar to a CEX, so it is not surprising that it has attracted so many users and so much capital. 

For instance, in the last thirty days, it recorded a trading volume exceeding $260 billion, and although this is less than Aster’s $296 billion, it is still significantly more than Uniswap’s $92 billion. 

Hyperliquid vs. HYPE

It is important to specify, however, that the remarkable success of Hyperliquid, the DEX, does not necessarily equate to a remarkable success of the native crypto of its blockchain, namely HYPE. 

In fact, Hype does not play a particularly significant role within the DEX, and with such a unique tokenomics, it might struggle considerably to emerge in the crypto markets, especially from now on. 

Indeed, the recent decline might have been influenced by the upcoming start of the unlocks, although sometimes in these cases, after the “sell the rumor,” the “buy the news” can follow. 

Much will depend on the actual impact on the price of the unlocks, and since these will be linear daily unlocks, it might not take long to appreciate them.