Grayscale has officially registered a trust linked to Hyperliquid (HYPE) in the state of Delaware — a move that is commonly viewed as a precursor to filing a formal S-1 spot ETF application with U.S. regulators. With this step, Grayscale becomes the fourth asset manager to enter the race for a spot HYPE ETF in the United States, following Bitwise, VanEck, and 21Shares.
If approved, HYPE could become the youngest altcoin to achieve ETF status, marking a significant milestone for the project. Market analysts suggest that collective demand from institutional investors via ETFs, combined with corporate treasury exposure and Hyperliquid’s ongoing token buyback program, could provide meaningful long-term support for HYPE’s valuation.
However, a key question remains: Can ETF optimism alone reverse the current bearish sentiment and drive a short-term price recovery for HYPE?
Market Sentiment Toward HYPE Remains in “Fear” Territory
HYPE experienced a brief rebound at the start of 2026, gaining approximately 18% and reaching $28 on January 6. However, nearly all of those gains were quickly erased, underscoring the market’s fragile confidence.
Despite growing ETF expectations, sentiment indicators continue to fluctuate between “Fear” and “Extreme Fear.” This suggests that traders remain cautious, unwilling to fully price in bullish narratives amid ongoing uncertainty.
Notably, Hyperliquid’s token buyback and burn program has introduced a strong deflationary dynamic. Over the past 24 hours alone, the project repurchased and burned 80,000 HYPE tokens, nearly three times the amount distributed as staking rewards (26,700 HYPE). While this mechanism reduces circulating supply, it has so far failed to meaningfully improve broader market sentiment.
According to well-known trader Altcoin Sherpa, the persistent negative outlook stems from several structural factors, including:
Monthly token unlocks
Continued whale selling pressure
Intensifying competition from emerging projects such as Lighter, Aster, and other perpetual DEX platforms
“Hyperliquid will eventually lead the market again, but I’m not confident about the timing. In the short term, I believe Lighter may continue to outperform,” Altcoin Sherpa commented.
Can Dip Buying Help HYPE Reverse Its Trend?
Despite the gloomy sentiment, there are early signs of accumulation. The Spot Taker CVD (Cumulative Volume Delta) has turned positive for the first time since May of last year, indicating that dip-buying activity on the spot market is increasing, even as prices remain under pressure.
This shift could be constructive, particularly if overall market conditions improve and ETF narratives gain further traction.
From a technical perspective:
$28 has emerged as a key short-term resistance level
This level also aligns with the descending 50-day moving average, reinforcing its significance
For a sustained recovery, HYPE must successfully reclaim $28 and convert it into a solid support zone. Failure to do so could expose the price to another downside move, with $23 and $22 acting as potential retest levels in the near term.
Final Thoughts
While the potential approval of a spot HYPE ETF represents a major long-term catalyst, short-term price action remains heavily dependent on market sentiment, token supply dynamics, and competitive pressures. Until confidence improves, volatility is likely to persist.
This article is for informational purposes only and does not constitute investment advice. Always conduct your own research before making any financial decisions. The author is not responsible for any investment outcomes.
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